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Dry Powder: The Private Equity Podcast

Tech Sector Update: Waiting for a Recovery

Dec 17, 2024
Chris Perry, Co-lead of Bain's private equity TMT practice, shares his insights on the tech sector's recovery and the impact of AI. He discusses the cautious optimism surrounding recent big-ticket deals and ongoing valuation challenges. The conversation dives into the complexities sellers face in asset sales, balancing profitability with growth, and the strategic mindset needed for success. Perry emphasizes the dual role of AI as both a challenge and an opportunity, urging tech investors to adapt and innovate to stay competitive in this evolving landscape.
18:05

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • The tech sector's deal-making landscape is showing a moderate recovery, although the deals are smaller and valuations remain flat year on year.
  • Investors are prioritizing a balance between growth and profitability, prompting tech companies to refine their strategies and efficiently integrate AI into their offerings.

Deep dives

Current State of Tech Deal-Making

The tech sector is experiencing a moderate recovery in deal-making, with the volume of closed deals in 2024 on pace to exceed previous years. However, these transactions tend to be smaller in scale, leading to a flat valuation year on year for mergers and acquisitions. Expectations regarding rapid deal-making have shifted, now leaning towards a timeline extending into 2025. The fundamental pressures of valuation and sellers' expectations continue to affect the market, making significant changes less likely in the near term.

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