Technology

Q1 2023 saw 118 deals in the Technology sector. This was a small increase from the previous quarter (101 deals) and reflects an average level of activity consistent with that observed over the last few years. Notable deals executed during Q1 2023 include:

• Sale of Coupa to Thomas Bravo, General Atlantic, and Abu Dhabi Investment Authority for £6.61b
• The acquisition of KnowBe4 by Vista Equity Partners for £3.76b

The Technology sector ranks second in our coverage model overall by deal volume. M&A in this sector has been influenced by:

• Consolidation – with the sector experiencing recent volatility, companies are seeking strategic M&A activity to consolidate their position and revenues.
• Innovation – with the rise of AI tools such as ChatGPT and the focus on VR tools such as the metaverse, companies will seek to rapidly innovate to maintain their dominance.

In the last two quarters we have rated the level of financial stress in the sector as high. In the most recent quarter we have also noted a surge in profit warnings from UK-listed technology companies. With rising costs and falling profits, the sector has also recently seen mass layoffs as companies try to become right-sized following pandemic era growth.