You need to have faith, hope, and $7.2 trillion in fiscal and monetary stimulus behind you to power through the COVID-19 pandemic. AGC’s early read of the new post-COVID normal is that the tech M&A market will be in short supply of companies for sale until September. PEs are not likely to be selling portfolio companies until the COVID storm has passed. And while VCs may be more willing to sell, it will be driven by portfolio restructuring, i.e. cutting loose underperforming investments to free up time and capital for perceived winners. This will likely result in a leaner market not just in quantity, but also quality. The good news is, deals going to market right now are getting a ton of attention. While PEs may be on the sidelines as active sellers, they are lined up in droves as buyers, and their pockets are very deep.

The tech M&A business is decelerating rapidly as of this writing. Q1’20 volume was 853 deals vs 850 in Q1’19, surprisingly solid! First week of April volume is down 30% and it will get worse as we progress through the quarter. That said, the S&P 500 is only down 3% over the last 12 months, an expression of confidence that the worst is over. It will be interesting to see whether the Strategics will take back ground from the PE players in these challenging times after giving up so much tech M&A market share over the last 5 years. We estimate the Top 200 Tech PE Funds to have over $1T in tech AUMs including significant dry powder. On the tech VC front, by COVID-19, we expect them to be busy identifying companies for disposition. While cash deals will be harder to come by because of the virtual shutdown in the debt markets, equity swaps with the PE-backed strategic will proliferate.

The attached deck covers some of the latest data on tech M&A.

Click to download AGC’s report: AGC-COVID-19-Tech-MA-Update-Apr-2020

With AUMs growing by nearly $400B annually and on track to surpass $5T by 2023, private equity has been the fastest growing asset class for some time now. As a subset, tech-focused PEs have been a strong driver of that growth. Tech PEs have become the power player in the global tech world competing toe-to-toe with the strategic community and rocking the landscape across the hundreds of technology markets and thousands of companies. They now account for 31% of all deal flow, up from 9% at the beginning of the decade.

The post great recession generation of tech PE funds deserves the mantra of “buy and build,” and our analysis bears that out. The top Tech PE firms seek out and pay up for platform companies that have the size, market leadership, and management on which they can build. Over the two year period tracked, the top five firms alone combined for 369 add-ons and 83 platform acquisitions, a roughly 4 to 1 split and multiplier effect. These are the firms perfecting the PE “buy and build” formula, generating outsized returns and new fund closings in kind.

In this report, AGC identify what they believe to be the core of the Tech PE world, with firms ranked by number of deals, dollar value, fund formation and other key metrics.

Click to download AGC’s report: AGC-Global-PE-Tech-Review-Feb-2020

Attached is AGC Partners’ Insight report “The ABCs of SMBs.” This thought piece explores the market for software and services selling into small and midsize businesses (SMB) globally, and the technology providers and strategies used to best penetrate this underserved and rapidly growing market. The low-cost ease of use SaaS delivery model has broken open the SMB market, generating $380 billion in software spend.

SMB is a different animal than the large enterprise market, and requires a radically different go-to-market strategy. A watered-down version of an enterprise offering is almost guaranteed to fail. Software vendors need to maintain a laser focus on unit economics and a low-cost approach to sales in order to minimize customer acquisition costs and churn, and maximize volumes.

Click to download AGC’s report – ABCs-of-SMBs-12.12.19-Condensed-Version

Attached is AGC Partners’ Insight report on the future of restaurant technology.

Entitled “The Future of Restaurant Technology,” this piece explores how technology is positioned to transform this $900 billion sales industry, historically one of the most labor intensive sectors of the U.S economy. An extended economic recovery, low unemployment rate, and continued rise of millennials as the largest demographic in the workplace are factors driving strong restaurant spending. Yet, razor thin profit margins and unique challenges restaurants face require purpose built solutions to cut costs, gain efficiencies, and increase visibility. These factors have created a multi-billion-dollar market for restaurant management software, which is growing at double digits. Online ordering and migration to next generation POS to facilitate ordering, payment processing, customer interaction, marketing, sales tracking and order management is driving much of the growth. This report takes a closer look into the market as well as companies in the ecosystem, M&A and private placement activity.

Click to download AGC’s report – AGC-Restaurant-Tech-Nov-2019

Attached is AGC Partners’ Insight report on Genomics Data Management.

AGC’s research on the market for Genomics Data Management Software can be found in our latest Insight report, which you can request to download using the form below. It discusses how the analysis, integration and interpretation of data from next-generation sequencing (NGS) technology poses challenges to researchers, and has given way to the market opportunities for Genomics Data Management Software. Other topics included in the report are listed below.

– Genomics Market Size & Growth Forecasts
– Company Landscape
– Problems & Solutions With Interpreting Genomics Data
– Case Studies on the Impact of Genomics Data Management Software
– Major Challenges to the Market
– Publicly Traded Companies Overview
– Top Genomics Data Management Software M&A Deals, Financings, and Most Active Investors
– All Genomics Data Management Software M&A Transactions and Private Placement Transactions Since 2016

Click to download AGC’s report – AGC-Genomics-Data-Management-Oct-2019