Insights

We partner with clients to address their strategic priorities, providing strategic mergers & acquisitions advice and execution, agented private capital financing services and board advisory services. We leverage decades of experience to navigate through complexity and deliver optimal outcomes.

Please register to view the Union Square Advisors 2024 Outlook report.

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Following the challenges of 2023, Union Square Advisors remains optimistic that technology deal activity will ramp up in 2024.

View previous Outlook reports: 2023, 2022, 2021, 2020, 2019, 2018

Outlook Report 2024

Reflecting on a volatile 2023, we note that factors like the banking crisis, high inflation, rising interest rates, elevated commodity prices and geopolitical issues significantly affected deal activity. However, in the second half of 2023, there was a meaningful increase in the number of technology companies making the decision to raise capital or pursue a strategic transaction.

The report details predictions and trends in M&A, private markets and subsectors within technology. Focus areas include:

Technology M&A Activity with Strategics and Private Equity will Continue to Improve

Union Square Advisors expects that strategic buyers who are seeing a rebound in their stock prices will pursue transactions with the expectation of a further market recovery, while also continuing to divest underperforming/non-core assets. VC and private equity firms will increasingly elect to move their portfolio companies to exits due to funding needs, pressure to return capital and improving business fundamentals. Despite this positive movement, many transactions still will be challenging to complete, given new norms for extensive diligence and a more expensive financing environment. While generative AI went mainstream in 2023, a slowdown in deal activity suggests the initial investor frenzy for the space may be tempering.

Capital Markets, Private Equity & Venture Capital: From Bleak to Cautious Optimism

Private credit continues to take share as borrowers and private equity firms seek alternatives to the broadly syndicated markets. While defaults are projected to peak in 2024, the firm predicts that private credit market participants will take solace in tighter covenants and stronger documentation/terms. Tech equity markets will see limited IPOs, while private markets will be more active, as private equity firms seek creative ways to return dollars to LPs and bolster their ability to raise new funds. Union Square Advisors believes private equity capital remains the crucial financing source, and the best liquidity option, for companies across the tech sector.

The Digital Future of Behavioral Health is Promising

Union Square Advisors forecasts a strong outlook for M&A in the space as market conditions are ripe for the next wave of digital health consolidation. Other trends in health tech to watch include life sciences opportunities, with current market conditions suggesting positive sentiment toward pharma IT in 2024.

The Evolution of Governance, Risk, and Compliance in the Modern Business Landscape

GRC technology providers are evolving to focus on multifaceted solutions that underpin the strategic resilience of modern organizations. Sectors increasingly intertwined with GRC include ESG and comprehensive supply chain solutions, with the latter, in particular, attracting meaningful investment in the wake of significant pandemic-driven supply chain challenges.

Digitization in Customer Engagement and Industrial & Construction Applications

Subsectors like customer engagement and industrial and construction applications are unleashing the power of digitization to enhance near-term performance and build long-term resilience, with the expectation for increased deal flow to come.

Chairman's Corner

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CARTER MCCLELLAND, CHAIRMAN

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Tech Trends

Bloomberg News: The Tape

Our Co-founder and President Ted Smith joined Bloomberg News Radio this morning to discuss his outlook on tech M&A activity with Paul Sweeney and Alix Steel. Tune in at 11:07 for Ted’s insights.

Bloomberg News: The Tape

“While it’s more expensive than it was a year or two years ago, the total explosion in private credit that we’ve seen over the last couple of years has really made debt still a possible and meaningful source of capital. We just completed a $460M transaction that was exclusively done in the private credit market”

Bloomberg Markets - The Close

Bloomberg Markets: The Close

After a tough first half of 2023, “green shoots are starting to appear now, deals are being talked about and they’re getting done,” according to our President and Co-Founder Ted Smith during a recent appearance on Bloomberg News “The Close.” Check out why Ted is so optimistic about the deal environment starting at 1:03:38.

WSJ

Tech Stocks Have Recovered, But That Hasn’t Helped Startups

Managing Director Emily Todd Anderson shared her insights with Angus Loten on where tech startups and their investors currently stand as public markets are surging. Read her outlook in The Wall Street Journal below on how current market and geopolitical conditions are impacting the world of startups.

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