PwC sees SaaS continuing its hot streak in tech M&A in 2021

SaaS was the most active part of tech deals in 2020, PwC found in its recent Technology Deals Insights report.

PwC projects that the tech sector, and specifically SaaS, will remain a hot market in 2021 as the shift to the cloud accelerates.

SaaS was the most active part of tech deals in 2020, PwC found in its recent Technology Deals Insights report.

“The outlook is clearly ramped-up acquisitions to help companies accelerate their repositioning into SaaS, or to capitalize on the new ways of working and living in a COVID-influenced world,” wrote Marc Suidan, US Technology, Media & Telecommunications leader at PwC.

The new remote way of being has derailed many companies’ timelines, allowing major players to emerge stronger than their less-capitalized competitors, PwC said. This is giving the companies the ability to grow through transformative acquisitions, the firm said.

In 2021, PwC expects that capital will continue to flow easily into the tech sector, as indicated by record VC funding levels seen in Q3 2020 – one of the highest quarters ever, second only to Q4 2018, according to PwC’s analysis. The K-shaped recovery has divided the industry into “winners” and “losers,” as the larger well-capitalized companies will look to grow through transformative acquisitions and acquire competitors that are less equipped to weather the storm, the report noted.

In 2020, PwC said tech M&A has improved dramatically in the second half of the year. The deals included 14 mega deals (for a total value of $192 billion), compared to just four mega deals (totaling $33 billion) in the first half of 2020. However, overall deal volume remained low compared with prior years.