Big deals are on the way.
The sharp decline in technology stocks over the past six months, making companies cheaper to buy, is likely to increase merger activity, bankers said. Many companies in different parts of the technology can be targeted – the purchase of Sam Bankman-Freud to 7.6% stake in Robinhood raises the prospect of the stock trading company to be acquired, while the confidential IPO of Instacart this week puts the company on delivery of groceries on the list too.
But enterprise software companies like Zendesk or Box can present the most compelling goals. Their combination of recurring revenue and sticky customer bases makes them attractive and contrasts with the more volatile consumer technology companies that typically rely on revenue advertising. The most likely buyers? Private equity firms that have a lot of money and face fewer regulatory constraints than large technology companies.