Digital Transformation Will Spark a Frenzy in Tech M&A in 2018: Prediction
Venture capitalists expect a big year in tech mergers and acquisitions. Flush with cash from reduced corporate tax rates and repatriation, Facebook (FB), Apple (AAPL), and Google parent Alphabet (GOOGL) are expected to go shopping to fill gaps in their product portfolios.
Yogesh Amle, head of software at investment bank Union Square Advisors, predicts plenty of activity in his 2018 outlook on tech M&A.
Among his points:
* Digital transformation in insurance, retail, and manufacturing will force industry incumbents like General Electric (GE) and Honeywell International (HON) to consider acquiring software companies. If they don't, enterprise software players IBM (IBM), SAP (SAP), and Oracle (ORCL) will.
* So-called next-generation enterprise software providers such as Salesforce.com (CRM) will broaden their corporate footprint by acquiring complementary assets.
* Service providers to vertical markets, including Accenture (ACN) and Capgemini (CAP.France), will be active in software acquisitions to boost their capabilities.
"Abundance of private capital has helped relieve pressure to go public and driven up valuations; however, private software companies now face a higher bar on performance, scale, and path to profitability," Amle says. "Acquirers are looking for assets that will move the needle."
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