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M&As in the Tech Sector: Q4FY24 Insights  - Blog 1/2
M&As in the Tech Sector: Q4FY24 Insights - Blog 1/2

June 14, 2024

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This is the first blog in a two-part series detailing the Indian M&A landscape in Q4FY24.

 

In Q4FY24, the Indian technology sector witnessed a notable shift in M&A activities, reflecting broader market dynamics and strategic realignments within the industry. The period saw significant changes in the volume, value, and nature of these deals, painting a complex picture of the industry's current state and future trajectory.

 

Decline in Deal Volume

The number of M&A deals saw a steep decline in Q4FY24, plummeting by 53.8% q-o-q and 58.3% y-o-y. This sharp reduction indicates a more cautious approach by companies amidst ongoing global uncertainties and market volatilities. Factors such as economic slowdowns, geopolitical tensions, and evolving regulatory landscapes may have contributed to this dip, prompting firms to be more strategic and selective in their acquisition pursuits.

Fluctuations in Deal Value

Despite the reduction in deal volume, the average deal value presented a mixed trend. It increased by 10% q-o-q, suggesting that while fewer deals were closed, they were of higher individual value. Conversely, there was a 57% y-o-y decline in the average deal value reflecting the contrasting dynamics and possibly smaller-scale transactions dominating the market compared to the previous year. This dual trend underscores a market adjusting to new realities, where large-scale deals are less frequent, but significant investments still occur in strategic areas.

 

 

Shift in Deal Activity

A noteworthy development in Q4FY24 was the shift in the type of deal activity. Inbound deal activity surged to 39.4% from 18.1% in Q4FY23, indicating a growing interest from foreign companies in the Indian tech landscape. This surge underscores India's increasing attractiveness as a hub for technological innovation and talent.

Outbound deal activity, representing Indian companies acquiring abroad, remained stable at 15.2%, slightly lower than the previous quarter. This stability suggests a sustained interest in international expansion, albeit at a cautious pace.

However, domestic deal activity saw a significant drop to 45.5% from 66.7% in Q4FY23. This decline points to a possible saturation or consolidation phase within the domestic market, as companies may be focusing more on strengthening their core operations or exploring international opportunities.

 

Type of M&A deals

Preferred Destinations for M&A

The United States continued to be the preferred destination for outbound M&A deals by Indian tech firms. This preference highlights the strategic importance of the US market for Indian companies, both for its size and technological advancements.

For inbound M&A deals, the US also led the pack, followed by Indonesia and the UK. This shift from Germany to Indonesia as a significant investor marks a strategic pivot, reflecting emerging market dynamics and the evolving global tech landscape.

 

To know more details about these M&As and their strategic rationale, read my next blog in this series.

Source:

 

  •   Venture Intelligence

 

 

 

 

 

 

 

 


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Prajwal Pandey
Research Analyst

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