USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters LLP
Linklaters LLP 1290 Avenue of the Americas New York, NY 10104 USA Tel: +1 212 903 9000 Web: www.linklaters.com
1. Market Trends 1.1 Technology M&A Market
Recent economic and political developments have also provided more reasons for optimism that M&A deal flow will continue its steady incline for the rest of 2024 and beyond. The recent news of the Federal Reserve’s decision to cut interest rates was well received by the US market, and market participants are increasingly expecting a soft landing for the US economy. 1.2 Key Trends One of the main themes in tech M&A in 2024 has been the growth of generative artificial intel- ligence (AI). The tech sector’s preoccupation with generative AI has been well documented throughout the year, as numerous companies have branded themselves as “AI-driven” (wheth- er or not entirely justified). Most of the deal flow in the AI space is still largely driven by venture capital (VC) investments, but AI is expected to be a focal point of tech M&A deal flow in the coming months. Data centres, which are needed to power AI applications, have also experienced a surge of activity following the AI boom.
The US M&A market has contended with head- winds, including high interest rates, geopolitical tensions and heightened regulatory scrutiny, which have slowed down M&A activity signifi- cantly in recent years. The US technology sector has not been immune to these headwinds and has also been experi- encing lower levels of M&A activity compared to the pre-COVID-19-pandemic years. In addi- tion to valuation gaps between parties, the Biden administration adopted an aggressive antitrust enforcement regime that contributed to the depressed deal making in the technology sec- tor. The steep decline of de-SPAC transactions and the dwindling interest in crypto-assets and companies also contributed to the slowdown in technology M&A over the last year. Alongside the mild recovery in general M&A activity seen in 2024, technology M&A has also recently been making a comeback, driven large- ly by the advent of generative AI and machine learning, decelerating inflation and general opti- mism for a continued reduction in interest rates, as well as high volumes of dry powder that have accumulated in strategics.
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