INDUSTRY FOCUS
TECHNOLOGY
OVERVIEW
2020 was nothing but normal for the technology and telecom industries, evidenced by the NASDAQ jumping over 40% from 9,100 to close the year at 13,070. 2020 confirmed that tech is and will remain the driving force behind the transformation of all other industries in the US.
The broader technology and telecommunications industry is divided into six sub-industries: consumer electronics, hardware, household appliances, IT services, software, and telecommunications.
This industry moves at a fast pace, drive innovation, and offers some of the highest salaries for Americans in key regional clusters like San Francisco, Seattle, Boston, and New York.
The technology and telecommunications industry features several US-based companies such as Apple, Google, Amazon, IBM, Intel, and Microsoft; some of the world’s largest and wealthiest companies. The industry is also the most active in terms of acquisitions, which translates into the greatest multiples across all industries (whenever multiples actually apply).
TRENDS & CHALLENGES
Key trends and emerging technologies in the industry include 5G (which started its deployment in 2020), AI, cloud, edge, IoT, and XR.
According to Deloitte, tech organizations in 2021 will be focusing on three key strategic opportunities:
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Redoubling digital transformation efforts, with an emphasis on improving cloud infrastructure, data and analytics capabilities, cybersecurity, and business model transformation
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Reorienting and reskilling the workforce to optimize remote work capabilities and take full advantage of advanced technologies such as artificial intelligence (AI)
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Reexamining where and how manufacturing happens, with a focus on improving transparency, flexibility, and resiliency.
FUTURE FORECAST
Technology devices and infrastructure are becoming smarter and more connected, supported by emerging technologies such as 5G and artificial intelligence (AI) while operating in the Internet of Things (IoT). Digital transformation will continue to transform all types of businesses for years ahead, supported by advancements in IT services, the cloud, and edge computing technologies.
Deal values and volumes surged in the second half of 2020, and we expect the M&A activity to remain strong as companies prioritize technology and digital transformation across all industries.
We expect the M&A hotspots for 2021 to include memory-intensive technology (NAND and DRAM), video gaming, SaaS, and fintech (particularly payment processing).
INDUSTRY PERFORMANCE
2M
MINIMUM ARR
8.2X
AVG. ARR MULTIPLE
Disclosure: These key performance indicators are based on industry averages for a company with $10 million in revenue. The KPIs are not specific to the operational performance of your company or your sub-sector.
The information contained has been obtained from different sources deemed reliable, including DealStats, Deloitte, Dun & Bradstreet, and Business Reference Guide. Pacifica Advisors does not make any representation or warranty as to the accuracy of the data. PA is a mergers and acquisitions (M&A) advisor and business broker.