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Union Square Advisors Releases 2022 Outlook Report

Union Square Advisors 2022 Outlook Report

Union Square Advisors, a boutique technology-focused investment bank, today announced the release of its 2022 Outlook Report: The Power of Resilience: Technology is Well Positioned for 2022.

Union Square Advisors forecasts that 2022 will be another strong and successful year for technology deal making, as technology proved to be resilient despite the ongoing impacts of the pandemic and divided U.S. political climate. Technology demonstrated an indispensable ability to bolster companies with innovation, while delivering strong returns for investors in the process. While 2022 brings with it additional headwinds (e.g., COVID variants, inflation, interest rate hikes and supply chain constraints), the firm believes that the abundance of available capital and the ability to finance technical innovation will enable the sector to continue its momentum in 2022.

In addition to the firm’s broad industry outlook, the report addresses the following trends within technology, capital markets and financing:

  • Technology M&A: Record Year All Around: The pervasiveness of the technology sector translated into a frenzy for acquisitions with TMT 2021 M&A volume at $1,037.8B, representing a 70% increase over 2020’s volume of $611.9B. In 2022, barring regulatory scrutiny of large transactions from the current administration, Union Square Advisors forecasts that the industry will continue to see M&A and financings transactions for companies as they scale to be more competitive, adopt the latest technologies, pursue strategies to strengthen their supply chain relationships and address any prolonged impacts of the pandemic.
  • Risk Management in the Post-COVID EraThe pandemic accelerated digital transformation that revolutionized key segments of the enterprise landscape. Union Square Advisors believes that the areas of technology that help companies keep pace with a fast-changing regulatory landscape, ESG assessment of third-party vendor relationships, compliance and data privacy, will continue to generate intense demand in 2022.
  • Private Equity: A Record Year for Deals: Buyers with money to spend, low interest rates, a strong post-COVID economic recovery and buoyant equity markets proved to be the perfect storm for a record year for private equity. Looking ahead to 2022, Union Square Advisors expects to see intensifying interest in growth equity, changes in deal structure, appetite for acquiring strong “platform” assets and a renewed focus on ESG continuing to drive activity.
  • Credit markets: Where Investors Can Find Yield: The past year proved to be a rare time in history where there was a combination of both robust growth and ultra-low interest rates. In 2022, Union Square Advisors expects investors to continue to hunt for alternatives in the technology sector to capture yields given its ability to lend into growth.
  • Technology that Drives Transparency, Consolidation and Predictive Analytics Will Transform Real Estate in 2022 and Beyond: Technology platforms proved to be the key to upending a historically opaque and disjointed real estate industry. As Union Square Advisors looks ahead to 2022, it predicts that unprecedented data transparency, the increased consolidation of services, and the rapid rise of predictive analytics will transform the real estate industry and drive investments in the technology to record levels.
  • Enterprise Software Growth Continues to Accelerate: 2021 forced companies to invest in information technology-related services and solutions as they pivoted to new models including digitized sales and marketing lead generation, customer service interaction and business communications. Union Square Advisors expects IT services and software to continue to be red hot solutions in 2022 as companies seek ways to automate and create a seamless, easy experience for their employees, customers and vendors.
  • Cloud-Native Technology Evolution Empowers Businesses in New WaysAs cloud-native infrastructure demonstrated how it could help companies address inherent in-building and running applications, as well as develop data management infrastructure, Union Square Advisors sees this technology presenting numerous opportunities for investors and those who can develop these next-gen solutions. In 2022, infrastructure software valuations will remain elevated, especially for companies that have effectively scaled and grown rapidly.
  • AIoT is a Spot to Watch: The confluence of IoT and AI (AIoT) proved it could deliver tangible ROI in the form of analytics-generated process and yield optimization, cost savings and a reduction of wasted materials in sectors such as manufacturing. Union Square Advisors anticipates AIoT to be a breakout technology for companies to invest in 2022.

“In 2021, the technology sector demonstrated a resilience that we believe positions companies to see more growth in the coming year,” said Carter McClelland, Chairman and Co-Founder, Union Square Advisors. “The verticals we’re focused on, like digital transformation, enterprise software, cloud computing, real estate tech and more, are positioned well for success in 2022.”

Ted Smith, President and Co-Founder agreed, saying, “We remain optimistic about technology continuing its role as one of the bright spots in the U.S. economy. Our outlook for 2022 is positive, and we expect our clients to remain active when it comes to deal making in the year ahead.”

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