Tech deals July 2022 update: no slowdown here…

Inflation and a looming recession dominate the financial press, but the appetite for B2B technology shows no signs of easing. The market seems to have taken short a pause for breath pre-Summer working up deals for what we expect will be another strong H2.

We’ve taken advantage of this to share some market data and update you on our recent work in the technology sector. 

Increased deal flow is a long-term trend 

The market has felt a bit bonkers of late, having recovered strongly after a short lived COVID dip, but as Figure 1 shows this is part of a long-term trend of increased deal flow. 

Figure 1: Mid-market technology transactions (Pitchbook, Armstrong analysis)

Appetite for buyside support grows 

We’ve seen an increase in the demand for buyside support to gain an edge in competitive processes for quality assets. Whilst we support this trend, it’s still a shame to see deal costs inflated when buy side advisors need to top up inconclusive and generic sell-side work. We are still of the view that comprehensive, independent and constructive sell-side CDD gets the best result for all parties. In other words, ‘do it right, do it once’. 

Accelerate growth and create value 

The most positive trend we see in the post-covid market is CDD becoming increasingly focused on the future state and how a business can ‘grow into a valuation’. We believe the growth in our tech practice (Figure 2) is in part due to our style of comprehensive, conclusive and practical strategic advice; we tell you where the business is now, what it could be in the future and how to get there. 

Figure 2: Armstrong technology deal volume (CDD and vCDD)  

This can also be seen in our recently launched Value Creation practice which provides complementary hands-on support for management teams and their investors; the premise is simple: collectively agree what to do and how to do it, then execute at pace. 

We’ve seen strong demand for these Value Creation workshops post-deal, whilst there is maximum attention and budget, to capture value of all DD streams, and ultimately accelerate plan execution. 

Looking forwards, the digital transformation juggernaut rolls on, driving demand across the sector (including MSPs, DX consultancy and implementation, ISV channel and niche software vendors) and we’re looking forward to continuing to support great investors and management teams as they create value in this fast moving space.  

Figure 3: Recent tech sector credentials (non-exhaustive) 

Meet the team 

Mike Callow leads Armstrong’s tech sector and is 100% convinced that taking up karate and motor racing since lockdown has nothing to do with an emerging mid-life crisis. 

Ifan Dafydd is passionate about sport and keeping active, despite the continuous cycle of highs and lows that being a Welsh rugby and football supporter entails. 

Magnus Hedberg enjoys the great outdoors through a combined interest in hiking, trekking and rock climbing, as well as taking his dog Pepper for long walks on the beach. 

Charlie Mundy is often found continuing his search for London’s best Cortado. He spends his Saturdays suffering through being a QPR season ticket holder and is always keen to practice his rusty Spanish.  

Klas Neuman is a rare Swedish cricket fan after long stints living in Australia and the UK.  He’s a Fulham FC season ticket holder, enjoys art shows, East European city breaks, countryside rambles and exploring London on his bike. 

John Immins enjoys walking and relaxing with his family, loves music and film and has performed as bassist and guitarist in bands over the years. 

Geoff Fitzgerald enjoys family weekend walking, MTB, fishing and B&I Lions tours. Former Fylde RUFC player and London/Oxfordshire rugby referee.  

Speak to Mike, Charlie or a member of the team if you’d like to discuss opportunities in tech.  

Mike Callow, Partner

[email protected]

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