Software & Technology M&A Pulse – Q3 2023

M&A Market Dynamics – Software & Technology

• The broader technology sector demonstrated a strong uptick in deal value in the third quarter of 2023 compared to the previous quarter, increasing more than 70%, with software specifically outpacing that growth with total deal value increasing more than 130% to $99B. Compared to Q3 2022, broader technology and software observed modest deal value increases, at 11% and 2%, respectively.
• Compared to Q2 2023, Q3 2023 software deal volume was down 4.6% with 627 transactions in the quarter. This represents a marked increase in average deal size, buoyed by 10 more deals valued north of $250M. Relative to Q3 2022, a period when deal volume slowed down considerably, software deal volume was up 5%.
• The venture capital ecosystem remains mixed heading into the end of the year, with the industry excited about the innovation to come but cognizant of the macro factors contributing to a cautious investing environment. According to a Pitchbook survey of 58 venture capital investors, over 40% anticipated a decrease in VC investment in technology startups, and over 70% cited interest rates as the largest macro factor impacting technology over the next few years. With that in mind, the clear majority of those surveyed listed AI as the area with the most expected innovation and growth over the next year.

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