Tech M&A continues to be extremely strong despite the current uncertainty in the economy. Huge amounts of cash in the system are chasing a number of deals limited by seller caution. Demand remains strong, in part because of a strategy shifting many buyers toward profitability and away from growth. That strategy also aims at more predictable markets less impacted by consumer sentiment or stock market gyrations. Corum sees this strategy as one of "Macro Resilience," an approach that resists the vagaries of economic cycles. Corum lists Macro Resilience as one of its top ten disruptive trends in 2023 driving M&A deals.

According to Corum Executive Vice President of Corporate Strategies Timothy Goddard, whenever there is instability in the economy, there is a certain amount of reversion to the mean when it comes to what buyers look for. And that typically means a shift from growth to profits and toward more stable markets such as defense or government. A recent example is the acquisition of Corum client Caseload by buy-and-hold acquirer Volaris Group. Caseload is a Canadian company that provides software solutions that manage complex legal and regulatory processes for appellate justice agencies.

The move to more stable markets is also driving Private Equity investment strategy. Kyle Hutchinson, an Investment Professional at PE firm K1 Investment Management, points out that while K1 has always focused on partnering with mission critical software businesses, characteristics such as durable recurring revenue and strong retention have never been more important. Hutchinson adds that K1 looks for companies that can achieve capital-efficient growth which he says, "has dynamically played out through several investments in verticals like education, legal, and government technology ‒ sectors that tend to perform well against the current macro backdrop given their sustainability across market cycles."

An increased focus on predictable profit and renewable revenue has also opened M&A opportunities for managed services businesses. Corum terms this trend "Focused Managed Services," and lists it as another top 10 disruptive trend for 2023. Anthony Hayes, Vice President of growth equity firm Mainsail Partners, says, "We love these managed services and markets that are critical to the economy, recession resistant, and given the durability of the industry revenue and customer base.”

Goddard notes that buyers are going after these managed services businesses because they offer the predictability of recurring revenue and long-term relationships, as well as the deep, specific domain knowledge that makes those customer relationships possible.  One recent example is the sale of Corum client Vetasi, a leading provider of IBM Maximo managed services, to infrastructure engineering software company Bentley Systems' Cohesive Group. Goddard adds that any managed services firm that has predictable recurring revenue and strong overall metrics is seeing interest.

For many strategic buyers resilience to macro forces is the primary reason certain companies are attractive targets for acquisition or partnership. Asked to identify the number one reason he gets excited about a company as an M&A target or a strategic partner, Peter Coffee, Vice President for Strategic Research at Salesforce, underscored value and sustained profitability. He put it this way, "For us, it's the partnerships that can create the most new value and assure interesting levels of profitability in 2023 and onward."

Utkarsh Bahadur, Senior Vice President and Global Head of Strategy and Revenue at SAP, sees Macro Resilience as a very exciting trend, one that’s changing the "script" for CFOs. Bahadur says that CFOs are now not only tasked to handle their usual scenarios, but they’re also responsible for deploying technology and enhancing their business in areas such as optimization of business networks, resource utilization, inventory control and visibility, and data intelligence, irrespective of the macro factors that may impact their business.

Understanding disruptive trends such as Macro Resilience that drive deals is vitally important in discerning what buyers look for in today’s market and how to wind up with an optimal deal. Goddard’s advice to sellers, "Properly positioning your company in relation to this disruption is critical to getting the true value of your company. Well-positioned companies get sold."