KPMG Technology Deal Flash – Edition Q1/2023

M&A, Funding, Valuation of technology companies in the current quarter


Each quarter we aim to keep you up to date with a concise review of the M&A and fundraising activity in the Technology Sector in GSA, together with a look at capital markets activity, valuation levels and a deep dive into relevant sector issues with insights from our KPMG experts.

In this issue:

  • Mergers & Acquisitions: Tech M&A activity in the GSA region witnessed a sharp drop of 14% q-o-q in 1Q23, falling back to 2Q22 levels. Although the M&A market continued to be affected by rising inflation, recessionary risks and geopolitical tensions, investors' demand for advanced SaaS-based technological solutions (e.g., artificial intelligence and machine learning) remained high, which was the key driver of the activity levels.
  • Funding activity: After declining funding activity in 2022, caused by a market correction resulting by an exuberant investor demand for high performing tech start-ups, the VC funding landscape recovered in 1Q23, as deal count jumped by 35% q-o-q despite unfavourable market conditions. Later-stage VCs set a new record this quarter with the highest number of deals recorded since 2018 (50 deals) and early-stage VC deal count increased by 26% q-o-q.
  • Valuation levels: Valuation multiples increased across most sub-sectors as tech companies are seeing an improvement in valuation, which had dropped last year due to a market correction and an unfavourable macroeconomic environment. However, valuation metrics of key sub-sectors still remain low as compared to the peak in valuation in 2021.
  • KPMG Insights: The topic of artificial intelligence has come back into sharp focus with the breakthrough of chatbots such as "ChatGPT" and "Bard". KPMG's new report, “Generative AI models” explores the generative AI market. It includes possible use cases, opportunities the technology provides in business transformations and risk considerations in leveraging such technologies in the organizations.