Indiana’s tech sector is in a red-hot cycle of mergers and acquisitions (M&A), with momentum so strong that the number of deals during the first three quarters of 2021 has already eclipsed full-year totals for 2020 and 2019, the Indianapolis Business Journal reported. The publication turned to corporate partner Jim Birge for insight into the M&A boom.
Birge noted that non-tech-company valuations have also increased. Tech companies have traditionally been valued at higher multiples than non-tech companies have been, Birge said, but because valuations have gone up in all sectors, some investors—particularly private equity firms—are becoming more open to tech-sector investments that they might have previously shunned.
“Before, private equity was just staying away from tech entirely,” Birge shared. “I think private equity is more comfortable getting into tech than they were before, because the prices of everything else have gone up.”
Birge also highlighted that pent-up demand is also helping drive the M&A boom. The pandemic delayed some deals last year, Birge explained, and now, “essentially two years’ worth of deals are getting done in 2021.”