M&A and Private Investment Remain Strong, Despite… | Stephens

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Market Trends

M&A and Private Investment Remain Strong, Despite Headlines to the Contrary

Apr 28, 2022

On the surface, it may appear that M&A and private investment activity in the Technology sector lost momentum in the first quarter of 2022. However, a deeper assessment of market dynamics reveals that deal activity remains strong on a historical basis, with strategic buyers and financial investors still actively looking to execute transactions this year.


Technology M&A total deal volume surpassed 1,400 transactions in Q1 2022, the most ever; however total deal value fell to approximately $216.67 billion from approximately $264.86 billion in Q4 2021 and approximately $338.45 billion in Q1 2021, according to 451 Research[1].

Part of the seeming drop-off in Q1 2022 activity may be due to artificially elevated deal flow in 2021, when many companies arguably transacted with the intent of getting ahead of expectations for impending higher capital gains obligations. Q1 2022 figures are still very high when compared to years prior to 2021. In 2020, total technology M&A volume came in just under 1,000 deals and total deal value was approximately $82.88 billion. In 2019, total technology M&A volume also came in below 1,000 deals while total deal value was approximately $129.75 billion, according to 451 Research. While Q1 2022 Technology M&A activity may seem to be declining when compared to last year’s record activity, Q1 2022 was actually very strong when compared to past years.

The same is true for private investment activity in the Technology sector. Seed through growth-stage technology investments totaled approximately $82.8 billion last quarter, an 11% drop from Q4 2021, according to Crunchbase[2]. Year-on-year, funding rose 3% from Q1 2021. North American early-stage venture capital investment last quarter had a total volume of 1,141 deals and total deal value of approximately $26.3 billion, compared with Q1 2021 total volume of 1,084 deals and total deal value of approximately $21.6 billion, according to Crunchbase.

Global venture capital, which is heavily technology-weighted, had total volume of 8,835 deals and total deal value of approximately $143.9 billion in Q1 2022, according to CB Insights[3]. That eclipses first quarter figures for 2021 (total volume of 7,933 deals and total deal value of approximately $134.2 billion); 2020 (total volume of 6,381 deals and total deal value of approximately $60.5 billion); 2019 (total volume of 7,265 deals and total deal value of approximately $69.3 billion); and 2018 (total volume of 7,208 deals and total deal value of approximately $57.4 billion). The anomaly of 2021 notwithstanding, Q1 2022 had some of the highest technology-related investment activity on record, according to Axios[4].

While the public markets for Technology stocks experienced a decline in Q1 2022, resulting in fewer IPOs, the Technology M&A and private investment markets continue to be strong.


In digital health, the total deal value of U.S. venture capital last quarter – approximately $6 billion – was comparable to total deal value for full year 2017, and at that pace 2022 may exceed total deal values for full year 2018 and 2019, according to Rock Health[5]. In cybersecurity, 108 total M&A deals occurred last quarter compared with 92 total deals in Q1 2021, according to SecurityWeek[6].

The strong M&A and investment activity in the Technology sector appear to be driven by private equity firms, many of which are managing more money than they can find good companies to invest in. Several PE firms acted on the dislocation in the public markets though take-private acquisitions last quarter. Despite the drop in Q1 2022 activity, PE firms are still aggressively looking to pursue acquisitions in the Technology sector, and they are still willing to pay high valuations[7] for attractive targets. This trend seems poised to persist in the months ahead. Well-run technology companies with solid growth prospects will still find attractive M&A and private investment markets, despite recent headlines to the contrary.

[1] Technology M&A values dive in Q1 even as volumes hit record | S&P Global Market Intelligence (spglobal.com)

[2] North American Startup Investment Fell 11% In Q1 In First Quarterly Decline In Nearly 2 Years (crunchbase.com)

[3] CB Insights Q1 2022 State of Venture Report

[4] U.S. venture capital investment dollars decline in 2022 (axios.com)

[5] Q1 2022 digital health funding: Staying the course in choppy waters | Rock Health

[6] Cybersecurity M&A Roundup: 40 Deals Announced in March 2022 | SecurityWeek.Com

[7] Analysis: With capital markets jittery, private equity pounces to finance tech buyouts | Reuters

About the Expert

Doug Brockway

Managing Director, Investment Banking

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