Last Month Today – September 2022 in review

Closing the deals: Enterprise software sector experiences an M&A frenzy in first half of 2022

The latest Enterprise Software M&A report from Hampleton Partners, the international M&A and corporate finance advisory firm for technology companies, reveals the sector experienced a frenzy of M&A activity during the first six months of 2022, with a total of 1,015 deals recorded, breaking the previous record of 953 deals in 2H2021.

Miro Parizek, founder and principal partner, Hampleton Partners, said: “M&A in the Enterprise Software sector has remained remarkably robust. It’s bucking the overall reduction in global M&A which shrank 27 per cent year-on-year due to market confidence-shaking geopolitical and macroeconomic events, including armed conflict in Ukraine, broken supply chains and central banks hiking interest rates to control inflation.”

“Accelerating demand for cloud-based services continues to be a prominent driver of deals, as businesses modernize and escalate operations to take advantage of high market demand. Plus, buyers appreciate the substantial SaaS-based recurring revenue streams baked into many target companies, providing them with a measure of recession-protection.”

According to Parizek, the Enterprise M&A market is very attractive now for sellers as well as buyers. Smaller vendors in niche sectors are having to deal with inflation, talent resourcing challenges and encroaching competition from tech giants. Many are using the attractive M&A market in Enterprise Software to sell to a trade buyer, merge, or partner with a private equity player to defend or establish leadership positions on a global scale.

No time to retire: Reducing portfolio volatility is top priority for European pension funds

European pension funds say reducing absolute portfolio volatility is their top risk management priority, as geopolitical tensions and high inflation continue to impact global investment markets.  This is according to new research from Alpha Real Capital, the specialist manager of secure income real assets.

Nearly half (46%) of European pension fund professionals interviewed, who collectively manage 324 BEUR in assets under management, say increasing portfolio diversification is their top strategic asset allocation priority.  Meanwhile, more than a quarter (28%) of respondents say their priority is to increase expected returns; and 18% will target increasing portfolio income.

The study reveals European pension funds are concerned about high inflation – with only 7% of respondents saying they were not worried about inflation.  This is understandable given over 70% of survey respondents claiming to manage their assets to an inflation plus benchmark (88% are looking to beat their strategic benchmarks by 1% to 3% over the long-term).  Interestingly, 56% of respondents hedge less than 50% of liability inflation risks while 20% do not hedge liability inflation risks at all.  Just over one-fifth (22%) are looking to increase inflation hedging.

Safety first: Current macroeconomic headwinds are driving security up enterprises’ priority list

Several massively disruptive political, economic, and social headwinds – soaring interest rates, looming food and energy shortages, a devastating and needless war, and the changing nature of work – are creating an especially challenging climate. According to global technology intelligence firm ABI Research, these headwinds are pushing security higher on the enterprise priority list as organizations seek cost-effective and agile cryptographic applications to protect increasingly distributed and ephemeral corporate assets. In response, hardware security modules are changing rapidly to meet these new demands.

“The Hardware Security Module (HSM) market was already on track for a shake-up, as new business models and new competitors vied to take advantage of emerging opportunities around enterprise digital transformation and cloud migration,” states Michela Menting, Cybersecurity Applications Research Director at ABI Research. “Today, enterprises are tightening budgets amid worries about their business stemming from high inflation and a potential recession. For HSM vendors, the market opportunity is clearly within the cloud, as enterprises are going to opt out of owning expensive HSMs in favor of Operational Expenditure (OPEX) service-based models.”

Menting shared her findings in ABI Research’s new whitepaper, 2022 State of Technology Report: The Future of Technology in a Tumultuous World. ABI Research analysts from throughout the globe have compiled their observations, analyses, and recommendations for critical technologies and end markets.

Reuters: IMF sees further global economic slowdown in third quarter

Downside risks continue to dominate the global economic outlook and some countries are expected to slip into recession in 2023, but it is too early to say if there will be a widespread global recession, IMF spokesman Gerry Rice said.

Rice told that high-frequency data pointed to a further loss of momentum in the third quarter, given continued high inflation, supply chain problems and tighter financial market conditions, but gave no details on any further revisions to the International Monetary Fund’s outlook.

“Clearly what we had characterized as a global economic slowdown has only intensified in recent weeks and months,” Rice said. He added that a continuing COVID-19 lockdown and real estate issues were weighing on economic activity in China, while the strengthening dollar had implications for many countries.

“Downside risks continue to dominate the outlook with just a tremendous amount of uncertainty that needs to be taken into account. We do expect some countries to face recession in 2023. It’s too early to say whether that would be a widespread global recession.”

Even if some countries were technically not in recession, it would feel like a recession for many people around the world. In Africa alone, hunger had soared by one-third over the last two years, affecting 123 million people.


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