Mergers & Acquisitions and the Technology Sector – Is it an Investment Focused Only on Startups? – prefix meaning environment

Globally, from 2020 to 2021, the M&A market saw a 64% increase in the number of transactions, with 71% of this increase driven by the technology sector. Portugal was no exception.

Mergers and acquisitions, the first as well as the phenomenon of acquisition, in any sector, represent a special form of growth and investment. It is therefore not surprising that, as a result of the continued growth and importance of the technology sector, there has been a significant (and continuing) increase in the number of company-based transactions in this sector.

Globally, from 2020 to 2021, the M&A market saw a 64% increase in the number of transactions, with 71% of this increase driven by the technology sector. Portugal was no exception, of course. With a 31% increase in the number of operations overall, a special note is that there is a 165% increase in acquisitions by non-national entities in the technology (and internet) sector compared to 2020. Beyond that, there is focused investment in Startups which, given their inherently potentially disruptive technological notion, gives them a natural tendency, we might say necessary, to monopoly—whose current trend has also often shown its speculative tendency to emerge—instead, essentially, we are seeing a broader trend, an undifferentiated number of ICT companies be it products or services. Noting that the consolidated technology company in the market is always profitable, and therefore enjoys the necessary liquidity and investment strength, we have read that the epidemic and the consequent increase in investment dedicated to ICT by companies in general, is referred to as the main element of this phenomenon.

Now, if the pandemic has opened the door to new needs for the business fabric, whether through remote work, virtual meetings, or a commitment to maintaining and creating interactive and engaging tools for customers, it seems to us, however, that by contributing, it was not element specific. It would take an internal analysis of the sector to conclude that there are multiple factors contributing to this trend. If we have, basically, an increased reliance on technology (roughly technophilia), where the need increases with the development of technology – and this is virtually endless – we find in Portugal determinants of success.

Taking into account the duality of the products and services mentioned above, and starting with them, we witness a constant stimulus to the intellectual production of new technological solutions, which you prefer, and which also characterize the phenomenon start. But here and in the services, the common denominator will not fail to be the presence of highly specialized resources. If we see acquisitions whose interest depends on the intellectual product, whether because of its current or even potential value, Portugal also finds a distinctive component of human capital. The technical training of resources in this sector, together with the relatively low cost, added to our geographical location, excluding the tax burden, makes Portuguese companies very attractive for foreign investment, but not only that. On the other hand, we also have a greater permeability for this investment, which is justified in the personality of the typical entrepreneur in this sector, whether it is a young man who wants to enrich himself and transfer his technology to the world, or who finds here the easiest and most effective way to increase his competitiveness in this The growing global market. Thus, it seems to us that the increasing importance of the technology sector in the M&A market is more than just a trend, but rather a certainty.

(Statistical data: Refinitiv and TTR)

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