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Tech M&A has been decimated, literally and etymologically. Spending on acquisitions so far in April is tracking to just one-tenth the level we have recorded for average months in recent years. And even as the value of tech deals this month plunges to an eight-year low, there doesn’t appear to be any uptick on the horizon.
According to 451 Research’s M&A KnowledgeBase, the coronavirus pandemic and accompanying economic slowdown has knocked tech M&A spending in the first half of April to just $2bn. Assuming the rest of the month continues at the same funereal pace, the amount spent by all acquirers around the world for the entire month would be lower than the amount some buyers have spent in a single transaction. For reference, the M&A KnowledgeBase shows 25 individual tech deals announced in 2019 that were valued at more than $4bn.
As paltry as the current acquisition activity is, there isn’t much coming after the few transactions that have already been announced. Pipelines have been hollowed out to historic levels because of uncertainty. That came through clearly in a special 451 Research survey of senior investment bankers, where we sought to quantify the devastating impact of the coronavirus outbreak on the tech M&A market. (See the full report.)
In our Flash Survey: Technology Investment Banking Outlook, half of the respondents said coronavirus has derailed at least one of every four deals they were working on before the outbreak. But highlighting the depth of the current crash, among this bearish group, one in four bankers (24%) said at least half of the transactions they were working on in February are no longer moving ahead, either temporarily or permanently.
