Corum sponsors a series of educational webcasts by region and sector, the Market Spotlight series hosted by World Financial Symposiums—one of the things we track is buyers by geography, and when you watch all of them there’s one thing that stands out quickly, namely, that US buyers are the most active across the board. Now, that makes sense when looking at tech sectors—US buyers do over half of all tech deals, period, but even when looking at regions you see the same thing. Across the Latin America, Australia-New Zealand and East Asia reports, the United States buys more technology companies than any other country.
Now, on one hand, that’s partly because the buyer universes in those regions are not as mature as they are in many places, and over time you’d expect those numbers to equalize. If you look at the fourth of our regional spotlight series, the Nordics, you do see that is the case, with the US coming in fourth in terms of deal volume because you’ve got robust, experienced strategic and financial buyers in the region. And to some degree that is true, and it something we at Corum are proud to be a part of through our global educational programs as well as the work we do with buyers and sellers all over the world.
But putting aside the long term for a bit, there’s good reason to expect that American buyers will continue to dominate global M&A in the short and even medium term—and I think some important lessons for both buyers and sellers.
The first is just straightforward—the US is where the money is, and US buyers, both financial and strategic have trillions of dollars to spend. With that much cash in the system, you’re going to see significant international M&A just by default.
Second, in the current inflationary environment, the dollar remains extremely strong, reaching a twenty year high against most other major currencies – this means it costs American companies less to buy companies internationally, and high-quality businesses, technologies and teams are available for what amounts to a considerable discount.
So, the opportunity is high, but there’s a need to acquire that is also driving US companies to look overseas. Even as the dollar remains strong, wage inflation and the “great resignation” have made hiring good people and building good teams here in the US significantly more difficult. Combine that with the newly built infrastructure for and comfort with remote and distributed teams, and acquiring offshore or nearshore capabilities, rather than build at home, starts to become necessary more than it is optional.
If you’re an international company considering M&A, this means you want to be sure to look at US acquirers, not just the usual suspects in your region. If you’re a US company, you should be considering making acquisitions abroad—there are good technology businesses everywhere.
In our nearly forty-year history, Corum has seen multiple markets open up to tech M&A, and the buyers who bought those good businesses early, before it was commonplace, have done very well. We’ve seen this in recent history as US financial buyers have become more comfortable in Australia—following Rubicon Technology Group’s investment in our client QSR International in 2018. The same thing will happen in every market eventually, so it’s something you should be thinking about today.
If you’d like to discuss your position as it relates to international M&A, whether buyer or seller—please reach out.