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Union Square Advisors forecasts that 2022 will be another strong and successful year for technology deal making, as technology proved to be resilient despite the ongoing impacts of the pandemic and divided U.S. political climate.

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

Outlook Report 2022

Technology demonstrated an indispensable ability to bolster companies with innovation, while delivering strong returns for investors in the process. While 2022 brings with it additional headwinds (e.g., COVID variants, inflation, interest rate hikes and supply chain constraints), the firm believes that the abundance of available capital and the ability to finance technical innovation will enable the sector to continue its momentum in 2022.

In addition to the firm’s broad industry outlook, the report addresses the following trends within technology, capital markets and financing:

Technology M&A: Record Year All Around

The pervasiveness of the technology sector translated into a frenzy for acquisitions with TMT 2021 M&A volume at $1,037.8B, representing a 70% increase over 2020’s volume of $611.9B. In 2022, barring regulatory scrutiny of large transactions from the current administration, Union Square Advisors forecasts that the industry will continue to see M&A and financings transactions for companies as they scale to be more competitive, adopt the latest technologies, pursue strategies to strengthen their supply chain relationships and address any prolonged impacts of the pandemic.

Risk Management in the Post-COVID Era

The pandemic accelerated digital transformation that revolutionized key segments of the enterprise landscape. Union Square Advisors believes that the areas of technology that help companies keep pace with a fast-changing regulatory landscape, ESG assessment of third-party vendor relationships, compliance and data privacy, will continue to generate intense demand in 2022.

Private Equity

A Record Year for Deals: Buyers with money to spend, low interest rates, a strong post-COVID economic recovery and buoyant equity markets proved to be the perfect storm for a record year for private equity. Looking ahead to 2022, Union Square Advisors expects to see intensifying interest in growth equity, changes in deal structure, appetite for acquiring strong “platform” assets and a renewed focus on ESG continuing to drive activity.

Credit markets

Where Investors Can Find Yield: The past year proved to be a rare time in history where there was a combination of both robust growth and ultra-low interest rates. In 2022, Union Square Advisors expects investors to continue to hunt for alternatives in the technology sector to capture yields given its ability to lend into growth.

Technology that Drives Transparency, Consolidation and Predictive Analytics Will Transform Real Estate in 2022 and Beyond

Technology platforms proved to be the key to upending a historically opaque and disjointed real estate industry. As Union Square Advisors looks ahead to 2022, it predicts that unprecedented data transparency, the increased consolidation of services, and the rapid rise of predictive analytics will transform the real estate industry and drive investments in the technology to record levels.

Enterprise Software Growth Continues to Accelerate

2021 forced companies to invest in information technology-related services and solutions as they pivoted to new models including digitized sales and marketing lead generation, customer service interaction and business communications. Union Square Advisors expects IT services and software to continue to be red hot solutions in 2022 as companies seek ways to automate and create a seamless, easy experience for their employees, customers and vendors.

 

Chairman's Corner

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CARTER MCCLELLAND, CHAIRMAN

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Tech Trends

Summertime blues: Is M&A downturn finally turning a corner?

Now that summer is over, should investors expect to see #mna activity ramp back up? Our Partner and Head of M&A Wayne Kawarabayashi tells Mergermarket that players are “itching to do deals” but that “getting the stars to align” remains a challenge.

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