Atlanta, May 21, 2024–(BUSINESS WIRE)–Inflation and interest rates made 2023 a weak year for dealmaking. But a new report from the law firm Morris Manning & Martin, Emerging Technology Investment Report, goes beyond these two elements to explore emerging technologies. Companies and the venture funds that invest in them discuss deal activity and expectations for the second half of 2024.
“Overall deal volumes will remain low in 2023 and beyond, continuing the trend from the lackluster second half of 2022, but the deals made during this period will provide companies with a temporary reprieve and allow them to move forward in 2024. “This is likely to be a more active preparation for the second half of the year,” said Nick Foreste, co-chair of Morris Manning & Martin's Emerging Companies and Venture Capital practice and author of the report. Ta. “We expect the outlook for the rest of the year to be positive as valuation expectations normalize, cash flow bottlenecks continue and credit markets are likely to become more attractive.”
The prediction for a surge in M&A activity is based in part on the fact that 90% of funds surveyed expect to bring one or more portfolio companies to market this year. This will end in 2023, and the report data shows that it was mainly characterized by “lifeline transactions” that helped companies buy time. The report includes many other interesting data points, including:
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65% of companies cite payroll expenses as one of the most challenging aspects of their current employee dynamics.
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In 2023, only 15% of companies surveyed participated in “down rounds” (funding that lowers a company's valuation than previous funding rounds), with extension rounds being the most common.
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45% of fund respondents cited valuation discrepancies as the biggest barrier to closing deals in the last year.
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Tech investors report that growing (but not yet profitable) tech companies have an average ARR of 7x.
The survey was conducted from January to February 2024 and included internal and external respondents. Two-thirds of external respondents were funds, one-third were corporates, and half of the respondents were in the Southeast. The rest were concentrated in the Northeast, West Coast, and Midwest. Investment stages ranged from seed and Series A to majority investment and PE buyout.
The full report can be found here.
About Morris Manning & Martin LLP
Morris, Manning & Martin (www.mmmlaw.com) is an Am Law 200 law firm with national and international presence. We are dedicated to the relentless pursuit of our clients' success. To deliver optimal value to our clients, we combine market-leading legal services with a thorough understanding of our clients' needs, maximizing effectiveness, efficiency and opportunity. MMM is nationally known for its real estate, corporate, litigation, technology, healthcare, intellectual property, capital markets, environmental, international trade and insurance practices. MMM has offices in Atlanta, Raleigh-Durham, Savannah, and Washington, DC
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