The agency shares 2023 predictions and insights associated to expertise M&A, financings, capital markets dynamics and tech developments to look at in its sixth annual outlook report.
NEW YORK and SAN FRANCISCO, Jan. 18, 2023 /PRNewswire/ — Following the challenges of 2022, Union Sq. Advisors, a technology-focused funding financial institution, forecasts attractive deal alternatives within the expertise trade this yr. These views and different insights are showcased within the agency’s 2023 Outlook Report, “Navigating the Path Ahead”, launched at the moment.
Union Sq. Advisors notes that 2022 created a tough deal-making setting, marked by cussed inflation, the battle in Ukraine, persistent provide chain issues and the lingering results of COVID-19. Whereas the agency expects to see volatility proceed this yr, it’s optimistic that the basically stable US financial system will result in a calmer deal making setting.
The agency believes the current financial downturn is nearing the underside and that markets will flip for the higher in 2023, with Individuals possessing $4+ trillion in financial savings collectively, particular person and institutional buyers changing into extra keen to offer financing, many firms nonetheless hiring and the Federal Reserve transferring aggressively to curb inflation.
The report delves into extra element on the next developments in expertise, M&A and capital market financings:
Know-how M&A: Continued Exercise Throughout Difficult Circumstances: Regardless of the robust deal-making setting final yr, with market indices dropping to 12-month lows towards the tip of 2022, strategic and personal fairness consumers had been nonetheless lively and printed some massive expertise offers. Though the macroeconomic and geopolitical backdrop will proceed to create volatility for M&A and financings, Union Sq. Advisors believes we’ll proceed to see robust exercise, even when volumes stay low near-term, and anticipates a pickup because the yr progresses. It’s a gorgeous valuation setting for consumers, a lot of that are flush with money, and targets might want to intelligently consider and pursue their strategic and financing options as they navigate the uneven markets.
Personal Capital Markets Will Prevail with Inventive Funding Methods: Whereas the macroeconomic setting will stay difficult in 2023, Union Sq. Advisors predicts that non-public capital can nonetheless be raised by using artistic funding methods. The agency expects strategic investments and heightened exercise inside personal markets, as corporates and sponsors plan to faucet into the dry powder held by personal credit score, personal fairness, and enterprise capital buyers.
Mega Tech Developments: The expertise ecosystem is experiencing each disruption and consolidation, creating an abundance of funding alternatives. In 2023, Union Sq. Advisors can be watching key developments and areas equivalent to robust threat administration software program, resilience-based enterprise applied sciences and infrastructure software program, thriving enterprise AI expertise and ESG development, amongst others.
Know Your Suppliers, Know Your self: As firms seemed to attenuate dangers throughout their provide chains and third-party vendor ecosystems, Know Your Provider (KYS) options continued to develop in significance in 2022. Union Sq. Advisors expects to see elevated investments in threat administration expertise as massive strategics proceed to construct out their product suites in response to buyer demand, regulatory tailwinds and trending expertise choices.
Elevated Deal Exercise in Infrastructure Software program: In 2023, Union Sq. Advisors expects deal exercise inside infrastructure software program to ramp up as present macro headwinds dissipate. Key developments which are thrilling the infrastructure software program trade embody modifications to client and enterprise identification infrastructure, the continued consolidation of containers and applied sciences enabling software containerization, and a shifting funding focus from Web3 to Generative AI.
The Consolidation of Buyer-Centric Software program: Union Sq. Advisors is seeing firms deal with consolidating throughout Buyer Expertise (CX) software program and migrating towards Buyer Engagement platforms that function the muse for an entire knowledge technique. In 2023, the agency expects the shift towards vital software program capabilities that may clearly level to ROI will proceed, particularly with tighter budgets amidst a tighter labor market.
Again Workplace Know-how to Proceed its Robust Run: Union Sq. Advisors expects a constructive pattern in again workplace expertise in 2023, particularly with provide chain threat administration, digital finance and ESG options applied sciences as main focus areas.
AIoT, Industrial Know-how and ESG: Developments to Watch: With consolidation exercise persevering with to speed up in 2023 and past, Union Sq. Advisors predicts that Subsequent Era AI and Synthetic Intelligence of Issues (AIoT) applied sciences and platforms will proceed to be enticing areas for deal exercise, as enterprises need to future-proof their organizations. The agency additionally predicts that ESG choices will proceed to be in excessive demand for enterprises as new authorities rules take impact this yr.
“Monetary downturns like what we skilled in 2022 occur fairly recurrently, averaging one each 4 to 5 years, and traditionally, each has concluded with a stronger financial setting on the opposite aspect,” mentioned Carter McClelland, Chairman and Co-Founder, Union Sq. Advisors. “We consider the US financial system is basically stable, and buyers are keen to seek out optimum capital options, which is why we stay optimistic that calmer seas and ample deal exercise are inside our attain.”
“Our primary advice for the yr forward? Do not sit idle,” Ted Smith, Union Sq. Advisors President and Co-Founder added. “The expertise trade remains to be shining a lightweight on unprecedented developments – from predictive analytics to password-less applied sciences, to Generative AI and extra. We stay assured that these vibrant spots and others inside expertise will gasoline robust deal exercise within the yr forward.”
To learn the total report, go to: http://www.usadvisors.com/wp-content/uploads/2023/01/USA-2023-Outlook-Report.pdf
About Union Sq. Advisors
Union Sq. Advisors is a number one technology-focused funding financial institution that provides strategic mergers & acquisitions recommendation and execution, agented personal capital financing and debt capital markets advisory companies. Based in 2007, with workplaces in San Francisco and New York, Union Sq. Advisors works with main private and non-private expertise firms, personal fairness, enterprise capital and household workplaces. Our experience spans many points of the expertise panorama, together with Enterprise Software program and Infrastructure, FinTech, Healthcare IT, Web+Digital Media, eCommerce, Shopper Software program, AIoT & Industrial Know-how and different key segments. Since inception, Union Sq. Advisors has suggested on greater than 160 strategic transactions, valued in extra of $115B. For extra data, please go to http://www.usadvisors.com.
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