AI-powered virtual data room Ansarada has outlined where M&A activity is likely to heat up in the next six to 12 months – and the technology sector is leading the way, thanks to US investors.
Ansarada’s latest quarterly M&A report, titled Indicators 3.0, has revealed technology, real estate and the industrials sectors had the highest amount of M&A deals from June through to August 2018.
M&A activity in the IT or technology industry rose by 33 per cent, while the real estate sector saw an uplift of 25 per cent and the industrials sector enjoyed 23 per cent growth.
“Tech continues to be a strong sector and one with enormous potential, underpinning many businesses with other industries at their core,” the report said.
While the Australian tech sector was “comparatively new”, growth had accelerated to an “impressive” degree, with local firms such as Atlassian and WiseTech disrupting their respective industries.
According to the report, a major driver of M&A activity in this sector was US investment. American investors were drawn to Australia for its “lifestyle dividends” as well as its key placement in Asia-Pacific despite escalating trade tensions between China and the US.
“Our data shows the proportion of oﬀshore interest coming from the US has increased from 16 per cent to 32 per cent over the past two quarters.
“The US remains our number one contributor and is set to make an even more powerful impression on Australia’s economy in the coming financial year,” the report said.
With Australian technology firms growing quickly, Silicon Valley was “paying attention,” it said.
“I have deep respect for the growth mindset of the Australian tech community and I feel there is a greater sense of partnership here, where we can move faster here than we have in other markets,” cloud computing firm PagerDuty chief executive Jennifer Tejada commented in the report.
Google Australia public policy manager Alexander Lynch pointed to Australia’s culture and talent as “incentive” for investors.
“A culture that is open to innovation and new ideas is an important part of what helps Google attract talent to Australia.”
Furthermore, American firms – bogged down by stricter regulation in their home country – were flocking to Australia to “[take] a test drive in Australian markets,” the report said.
“Being able to trial a new business model or innovation without the risk is particularly appealing to already-established American tech companies.”
Within the technology sector, artificial intelligence, cyber security and quantum technology were earmarked as “key focus areas for investors in the tech space”.
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