In a previous blog (from early March) I wondered: will the music stop? The year 2021 was an insanely good year for IT and other tech entrepreneurs to sell their businesses. Worldwide, a record number of technology companies changed hands, at historically high valuations. In the world of tech mergers & acquisitions (M&A) 2021 was a year of superlatives. That also applied to the Netherlands.

What would 2022 bring? There are a number of factors that have been against us since at least the beginning of the year. Interest rates are rising, making borrowing money (for acquisitions) more expensive. There is also high inflation (rising prices), which reduces the purchasing power of people and companies. The war in Ukraine provides extra economic uncertainty.

cautiously optimistic

Still, now that we live a few months in these changed circumstances, I am also cautiously optimistic. I may be looking too rosy. It is also possible that circumstances will change. But at the moment there are clear signals that the market for mergers and acquisitions of tech companies is not just disappearing. As has happened in previous crisis situations. During the dotcom crisis in 2000, during the credit crunch in 2008, and to a slightly lesser extent in year one of the COVID-19 pandemic, it was doom and gloom for those who wanted to sell their business.

That's different now. Take Europe. In the first three months of 2022, data provider PitchBook recently reported, 4,138 mergers and acquisitions with a total value of EUR 455 billion. Both the number of transactions and the amount are records (for a first quarter).

Record quarter in M&A

You read it right. The quarter in which Russia invaded neighboring Ukraine was a record quarter in M&A. How is that possible? In large part, the explanation is that transactions completed at the beginning of the year have already been initiated at an earlier stage. But it is definitely also the case that entrepreneurs had enough confidence to complete those transactions en masse.

Zooming in on the technology sector now, what will the next few months bring? Jinny Choi of PitchBook says: 'M&A in tech is expected to remain robust.' Yes, there is a lot of headwind, and yes, that can have a negative impact (especially on valuations), but at the same time companies and also buy-back funds have a lot of cash. This concerns money that they have been able to raise very cheaply in the past two years, according to the analyst. Fast-growing tech companies in particular remain interesting.

Lots of new growth capital

I see another valuable signal in the world of growth capital providers (or venture capital). It's PitchBook again that in another study reports that venture capital funds worldwide have already raised EUR 66 billion in fresh money in the first three months – which is more than last year.

Finally, in addition to all the statistics, there is also what I see myself. Although No Monkey Business has only been around for a few years, the first quarter of 2022 was easily our best quarter so far: in terms of turnover, but also in terms of interest from entrepreneurs.

There is plenty of money for mergers and acquisitions in M&A. Even if all the turbulence in the global economy is expected to increasingly impact corporate sales, a hard crash does not appear to be imminent. If you are planning to monetize the company in a dream exit this year – the opportunity is certainly there.