Morris, Manning & Martin’s Inaugural Emerging Tech Investment Report Reveals More Active Tech Investing in Second Half of 2024
May 21 2024 - 11:11AM
Business Wire
Inflation and interest rates played into a down year for
dealmaking in 2023. But a new report from law firm Morris, Manning
& Martin—the Emerging Tech Investment Report—goes beyond those
two factors, surveying emerging tech companies and venture funds
that invest in them on their dealmaking activity and expectations
for the second half of 2024.
“While overall deal volume remained low coming out of 2023,
continuing a trend from a lackluster second half of 2022, the deals
made during this period provided companies with a temporary
reprieve and likely set the stage for a more active second half of
2024,” said Nick Foreste, co-chair of Morris, Manning &
Martin’s Emerging Companies & Venture Capital practice and the
author of the report. “We expect a brighter forecast for the
remainder of the year as valuation expectations normalize, cash
flow obstacles persist, and credit markets likely become more
attractive.”
The predicted surge in M&A activity is based in part on the
fact that 90% of funds surveyed say they expect to take one or more
of their portfolio companies to market this year. This would mark a
break with 2023, which report data shows was characterized by
“lifeline deals” that largely served to buy companies time. The
report includes many other interesting data points, including:
- 65% of companies cited salary expense as one of their most
challenging current workforce dynamic.
- In 2023, only 15% of surveyed companies participated in “down
rounds” (financings that gave the company a lower valuation than
previous financing rounds), with extension rounds being most
common.
- 45% of fund respondents cited valuation disagreements as the
biggest impediment to dealmaking last year.
- Tech investors reported an average multiple of 7x ARR for
growing (but not yet profitable) tech businesses.
The survey was conducted from January to February 2024 and
included internal and external respondents. The external
respondents were two-thirds funds and one-third companies, and half
of all respondents were in the Southeast. The rest were
concentrated in the Northeast, West Coast and Midwest. Their
investment stages ranged from Seed and Series A to majority
investments and PE buyouts.
The full report can be viewed here.
About Morris, Manning & Martin, LLP
Morris, Manning & Martin (www.mmmlaw.com) is an Am Law 200
law firm with national and international reach. We dedicate
ourselves to the constant pursuit of our clients’ success. To
provide our clients with optimal value, we combine market-leading
legal services with a total understanding of their needs to
maximize effectiveness, efficiency and opportunity. MMM enjoys
national prominence for its real estate, corporate, litigation,
technology, healthcare, intellectual property, capital markets,
environmental, international trade, and insurance practices. MMM
has offices in Atlanta, Raleigh-Durham, Savannah and Washington,
D.C.
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