In tech mergers and acquisitions, not all buyers are created equal. Some buy to expand their core business. Others buy purely to invest and later exit with a profit. These two camps—strategic and financial buyers—shape the M&A landscape in different ways. This article breaks down their roles, preferences, and share of deals across the tech sector, using key data points. We’ll walk you through real-world trends, what they mean for founders, operators, and advisors, and how you can act on them.
1. Strategic buyers accounted for 62% of global tech M&A deal volume in 2023
Strategic buyers dominate the global tech M&A scene
In 2023, strategic buyers were responsible for nearly two-thirds of all tech M&A transactions globally. That’s a strong sign of intent from corporations seeking to evolve by acquiring technology, talent, or access to new markets.
They are not in the game to flip assets. They want integration. They want synergy. And they want results that align with their long-term roadmap.
So what makes a buyer strategic? Think of Microsoft acquiring GitHub. Or Adobe buying Figma. These deals are about bolstering product portfolios, not just balance sheets.
What this means for tech founders
If you’re running a startup and thinking about an exit, this is good news. Strategic buyers often pay a premium. Why? Because the value they see isn’t just in your numbers—it’s in how your product or team enhances their bigger picture. They look at your user base, your technology stack, your team culture, and ask: “How will this move the needle for us?”
They also tend to be more flexible on deal structure. You might keep equity. You might lead a new division. Or you might simply cash out and transition over time.
What to do if you’re looking to attract strategic buyers
Positioning is everything. Don’t just show revenue. Show relevance. Understand where potential acquirers are headed. Study their press releases, earnings calls, and recent deals. Align your messaging and roadmap accordingly.
If you solve a real problem for them—or can accelerate a strategic goal—you’re no longer just another startup. You’re a puzzle piece they’ve been hunting for.
2. Financial buyers represented 38% of tech M&A deals globally in 2023
Financial buyers are still a big force
While strategic buyers led the charge, financial buyers still made up a hefty 38% of global tech M&A deals. That’s not a small number. These are private equity firms, venture capitalists, and hedge funds looking for returns—often over a three to seven-year horizon.
Unlike strategics, they usually don’t care about product fit. They care about operational efficiency, cash flow, and scalability. If your business runs lean and has predictable recurring revenue, they’re interested. If it’s bloated, hard to scale, or overly reliant on a founder, they’ll pass—or lowball.
What this means for tech companies in growth or distress
Financial buyers are often your best bet if you’re not an obvious strategic fit. For example, if you have a steady but unsexy product, a PE firm might see an opportunity to bundle you with other similar firms (a roll-up strategy), cut inefficiencies, and sell the combined entity later at a higher multiple.
They also love distressed assets. If you’ve hit a rough patch, a financial buyer might see your tech or customer list as underpriced value.
How to prepare for financial buyers
Focus on your financial hygiene. These buyers dig deep. Clean books, strong gross margins, and consistent growth are more important to them than vision or mission. They’ll also want to know how replaceable your team is, how your tech scales, and whether your customer acquisition model works without heroics.
If you want to attract these buyers, think like one. Run your business with discipline. Know your unit economics. And be open to letting go if that’s what gets the deal done.
3. In North America, strategic buyers made up 68% of all tech M&A transactions in 2022
North America leans strategic
The North American tech M&A landscape has a clear tilt—strategic buyers led nearly 7 out of 10 deals in 2022. That’s higher than the global average and tells us something important: in mature markets, large corporations are aggressively acquiring rather than building in-house.
This isn’t surprising. With rising R&D costs and rapid shifts in consumer behavior, it’s often faster to buy innovation than to build it. And in the U.S. and Canada, where big tech firms hold vast war chests, acquisition is often the easiest growth lever.
What founders in North America should know
If you’re based in North America, you’re sitting in a hotspot for strategic exits. But there’s a catch. These buyers are picky. They’re not acquiring just to grow; they’re acquiring to solve strategic gaps. That means your story matters. Your go-to-market strategy. Your traction with enterprise buyers. Your partnerships.
If you’re a startup with niche dominance—say in vertical SaaS or data tooling—you’re a strong candidate. Especially if you’re profitable or nearing profitability.
Building toward a North American strategic exit
Start early. Get to know corporate development teams inside potential acquirers. Attend industry events. Partner with their ecosystem. Make it easy for them to see how you fit.
Also, prepare for a longer diligence process. Strategic buyers will involve multiple internal teams—product, legal, finance, HR—and that can slow things down. Having clean IP ownership, clear employment agreements, and scalable systems can make or break the process.
4. Private equity firms (financial buyers) were responsible for 45% of total tech M&A deal value in 2023
Value, not volume, is where financial buyers shine
While strategic buyers dominate in number of deals, private equity firms make up nearly half of the total deal value. That tells us something powerful: when financial buyers move, they go big. They write large checks, often for mature or high-performing companies that offer strong returns after optimization.
Think of a financial buyer as someone who buys a house to renovate and rent or flip. They’re looking for value that can be unlocked through smart operations, better capital structure, or scale.
What this means for later-stage startups
If your company is at $50 million ARR and profitable, you’re prime territory for a PE deal. These firms will value your predictability and might even help you expand faster. Many financial buyers also have operating teams that help with hiring, pricing, systems, and go-to-market acceleration.
This can be great if you want to keep growing but need support—or want to take some chips off the table without giving up the wheel.
Tactics for founders and CFOs eyeing a high-value exit
Start benchmarking your financials against public comps. Financial buyers want to see how your unit economics stack up. They also look for “add-on” opportunities—so if you’ve done any acquisitions or integrations, highlight those.
Keep an eye on your debt levels and cash flow. These buyers often use leverage, and a healthy balance sheet helps them structure better offers.
If you’re in a niche sector with consolidation potential, you may even become a platform investment—meaning they’ll acquire you first, then buy your competitors to build a larger group. That can boost your valuation and turn your leadership role into a multi-year growth ride.
5. Strategic buyers tend to dominate small to mid-sized tech acquisitions (under $100M), accounting for 72% of such deals
The small and mid-cap market is a playground for strategic buyers
When it comes to deals under $100 million, strategic buyers take the lion’s share—nearly three-quarters of all such deals. That’s no accident. Smaller acquisitions often come with less risk, fewer moving parts, and faster integrations. For large companies, these smaller buys are a way to fill product gaps, acquire teams, or explore new segments without betting the farm.
For startups under $100M valuation
You’re right in the sweet spot for strategic buyers. These companies are more likely to approach you if your technology aligns with something they’re actively building—or if you can give them a competitive edge fast.
The benefit here is speed. These deals often close quicker than large M&A transactions. And they can be friendlier in structure, especially if the strategic buyer views the deal as part of a broader innovation strategy.
How to position your sub-$100M startup
If you’re below this threshold, highlight your IP, user growth, and integration potential. Focus on how your product would fit into a larger ecosystem. Also, showcase customer testimonials and case studies—they help validate that your solution works.
In your pitch materials, go beyond vanity metrics. Show how your company can unlock growth or efficiency for a much larger player. And be prepared to explain what your team does better, faster, or cheaper than incumbents.
Lastly, know that many strategic buyers have dedicated corp dev teams that scout deals in this range. Build relationships with them. These teams are often tasked with making recommendations directly to the CEO.
6. Financial buyers led 55% of tech M&A transactions valued above $500M in 2023
Big tech deals over $500M? More often than not, it’s private equity
While strategics dominate smaller deals, when we zoom out to larger transactions, financial buyers start to take the lead. In 2023, over half of tech deals above the $500 million mark were driven by private equity and other financial firms.
That shift in leadership at the high-value tier highlights a key trend: financial buyers are raising massive funds and deploying capital in bigger chunks. They’re not just backing small startups—they’re going after giants.
What this means for mature companies and unicorns
If you’re at a stage where your company could be valued north of $500 million, financial buyers should be high on your radar. They have the firepower. They move fast. And they often bring partners or co-investors who can support additional rounds, bolt-on deals, or even IPO planning.
Unlike strategics, they may offer a more hands-off approach post-acquisition. If you want to stay independent but take some liquidity or scale through capital, this could be your best fit.
Prepping for a financial buyer above $500M
At this level, diligence is deep and structured. Expect scrutiny on every part of your P&L, hiring practices, IP structure, customer churn, and long-term margin potential.
Build a strong CFO function early. Get regular audits. Create clear dashboards and KPIs.
Also, prepare for the possibility that the buyer may want to bring in their own operating team or even a new CEO over time. That’s not always the case, but alignment around leadership post-deal is crucial at this scale.
If your company has multiple revenue streams, segment them clearly in your pitch. Financial buyers will want to model them separately and see where the growth is coming from.
7. In 2023, 60% of cross-border tech M&A deals involved strategic buyers
Strategic buyers lead when borders are crossed
Cross-border deals are always complex. Different laws. Cultural barriers. Regulatory scrutiny. That’s why it’s telling that 60% of all international tech M&A transactions in 2023 were led by strategic buyers. These buyers aren’t just looking for growth—they’re aiming for global presence, regional footholds, and new customer bases.
Think of SAP acquiring U.S.-based Qualtrics. Or Sony buying a European gaming firm. These moves aren’t about fast flips—they’re about ecosystem building on a global level.
Why strategics dominate here
Strategic buyers are better equipped to navigate international complexity. They already have legal teams, infrastructure, and multinational tax strategies in place. Plus, they’re used to operating with long-term horizons. That makes them more comfortable tackling deals across regions, even if the ROI takes time to materialize.
What international startups should keep in mind
If you’re building a company outside the U.S. or Europe, strategic acquirers could be your best bet. They may be looking to enter your region or leverage your market knowledge. In some cases, acquiring you is cheaper and faster than trying to grow organically.
This is especially true in markets like Southeast Asia, the Middle East, or Latin America—regions where barriers to entry are high unless you have local knowledge or a strong brand.
Preparing for a cross-border strategic deal
First, understand which global players are expanding in your category. Then, make sure your legal documentation, IP rights, and compliance policies are rock solid—especially across borders. Buyers will want to know that acquiring you won’t trigger regulatory headaches or hidden tax liabilities.
Also, ensure your financials can be converted and compared easily. If you report in local currency, offer clean USD-based conversions using GAAP or IFRS standards. Make it easy for a U.S.- or Europe-based buyer to evaluate your business.
If language or culture could be a hurdle, think about localization support post-acquisition. Offering to help lead that transition can increase your deal appeal.
8. 75% of tech M&A deals involving enterprise SaaS companies were led by strategic buyers
Enterprise SaaS is a magnet for strategic acquisitions
There’s a reason three out of four enterprise SaaS M&A deals are driven by strategic buyers. SaaS—especially enterprise-grade platforms—offers predictability, high margins, and long-term value through subscriptions. These qualities align perfectly with the goals of strategic acquirers.
Companies like Salesforce, Oracle, and Microsoft aren’t just buying features—they’re buying long-term retention machines that can plug into their ecosystems and upsell existing customers.
Why strategics prefer enterprise SaaS
Enterprise SaaS products often come with deep integrations, complex onboarding, and strong switching costs. That means customers stay longer, and churn is low. Strategic buyers love this because it enhances their customer lifetime value and strengthens their core offerings.
These buyers also look for product adjacencies. If you’re solving a problem that’s related to but not yet covered by their stack, you’re prime acquisition material.
How SaaS founders can prepare for strategic interest
Focus on enterprise metrics: Net Revenue Retention (NRR), Customer Acquisition Cost (CAC) payback, and average contract value (ACV). These are far more important than vanity metrics like website visits or downloads.
Highlight stickiness. Show how your tool becomes embedded in customer workflows. If you’re integrated into a client’s CRM, data warehouse, and daily routines, you become indispensable.
Make sure your onboarding and support processes are strong. Strategic buyers will want to know they can scale your product without breaking it.
And finally, map out how your product could integrate with an acquirer’s stack. If you’ve already partnered with them—or if your clients are asking for integrations—that’s a great signal to highlight.
9. 58% of all tech M&A deals involving cybersecurity firms were conducted by financial buyers
Financial buyers are betting big on cybersecurity
Unlike SaaS or AI, cybersecurity has a different M&A profile. In 2023, nearly 6 out of 10 M&A deals in the cybersecurity space were led by financial buyers. That’s a huge signal. These buyers see cybersecurity as an essential and resilient market with long-term upside.
With data breaches on the rise and enterprises under pressure to modernize their defenses, demand isn’t slowing down. PE firms and funds want in—especially on companies with stable ARR and compliance-focused offerings.
Why financial buyers love cybersecurity
Cybersecurity tools often have sticky revenue, high renewal rates, and a deep moat created by certifications and trust. Once installed, they’re rarely replaced quickly. Plus, these companies often serve industries that can’t afford to drop coverage—like finance, healthcare, and government.
This makes them ideal for roll-ups or “platform” investments where a PE firm buys a core asset and then acquires others to add features or expand reach.
Building appeal as a cybersecurity company
First, get your SOC 2, ISO 27001, or other relevant certifications in place. These increase your attractiveness not only to customers but also to acquirers. Second, lock in long-term contracts. The more recurring your revenue, the more leverage you have.
Financial buyers also want to see clear customer segmentation. Who are you selling to? How sticky are they? And can you expand those accounts over time?
Your cost structure matters too. Financial buyers will model out margins and cash flow potential post-acquisition. So show how you can operate lean—or how cost savings are possible with better infrastructure.
Finally, if you’re part of a growing cybersecurity niche—like endpoint detection, zero trust, or threat intelligence—call that out. Trends drive M&A, and positioning within a hot sub-sector can be a major value driver.
10. Strategic buyers completed 66% of all acqui-hires in tech from 2020 to 2023
Strategic buyers dominate the acqui-hire game
When it comes to buying companies for talent rather than product or revenue, strategic buyers are far ahead. Two-thirds of acqui-hires between 2020 and 2023 were completed by these buyers. That’s because big tech firms see people as their most valuable asset—especially engineers, designers, and domain experts.
A startup might fail to scale or monetize, but its team could still be worth millions if they’ve built cutting-edge solutions or developed niche expertise.
Why strategics lead in acqui-hires
Strategic buyers often have specific team gaps to fill. Instead of hiring one engineer at a time, it’s faster to buy a team with chemistry and a proven ability to ship product. They also see acqui-hires as a hedge—an opportunity to bet on talent that could drive innovation from within.
They’re less focused on your revenue or traction. What matters is your people, culture, and IP. If those align, a deal can happen fast—even if the business isn’t performing well.
How to set up for a successful acqui-hire
Start by identifying which companies are hiring aggressively in your space. Follow their job boards and team growth patterns. If you see a company consistently hiring roles similar to your team, they could be a fit.
Build relationships with their internal recruiters or corp dev leads. Let them know your team is open to discussions. Be transparent about where things stand with your startup.
When positioning for an acqui-hire, highlight your team’s technical strengths, culture, and product development velocity. If your engineers built a product in six months that normally takes a year, that’s a key point to showcase.
Also, clean up any IP or equity entanglements. Strategic buyers will want to make sure the team owns what it built and that there are no legal roadblocks to transferring assets or contracts.
11. Financial buyers accounted for 52% of leveraged buyouts in the tech sector in 2023
Leveraged buyouts are the playground of financial buyers
In 2023, more than half of all leveraged buyouts (LBOs) in the tech sector were done by financial buyers. That’s expected—because this structure is their signature move. An LBO means acquiring a company largely using borrowed money, with the expectation that the target’s cash flows will cover the debt over time.
While it might sound risky, it’s a tried-and-tested model. Especially in tech, where recurring revenue and strong margins can support this kind of debt structure.
Why financial buyers use LBOs
The idea is simple. Use less equity, use more debt, and amplify returns. If the company performs well post-acquisition, the returns can be massive. That’s why financial buyers favor companies with solid cash flows, low churn, and consistent profitability.
They’re not looking for rocket ships. They want stable, boring, dependable machines.
How to become an attractive LBO candidate
If you’re a founder or CFO aiming for this kind of exit, focus on two things: cash flow and consistency. The more reliable your revenues, the better. Long-term contracts, strong renewal rates, and limited customer concentration all help here.
You’ll also want to keep your cost structure tight. A bloated team, high overheads, or dependence on a few key hires can all scare off a financial buyer considering an LBO.
Another big factor is debt capacity. Financial buyers will model out how much your business can support in interest payments. So keep your balance sheet healthy and your EBITDA margins strong.
Finally, make sure your internal reporting is accurate and auditable. These deals often require third-party lenders to review the books, so clarity and compliance matter more than usual.
12. The median EBITDA multiple paid by financial buyers was 12.8x, versus 10.2x by strategic buyers in 2023
Financial buyers are paying more—sometimes
In 2023, financial buyers paid a median of 12.8 times EBITDA for tech companies, compared to 10.2 times by strategic buyers. This might surprise you. After all, aren’t strategic buyers supposed to pay more due to synergies?
Yes and no.
While strategics often pay premiums when they see strong integration potential, financial buyers compete fiercely in popular sectors. When they find a business with exceptional margins and predictable cash flow, they’re willing to stretch.
Why this pricing gap exists
Financial buyers often have more flexible capital. They may be under pressure to deploy large funds quickly. If they identify a company that fits their model, they’ll bid aggressively.
Strategic buyers, on the other hand, have to justify acquisitions to internal teams and often run stricter models around return on invested capital. That can make them more conservative on pricing unless they see massive upside.
What founders should take away from this
If you’re receiving interest from both types of buyers, use this knowledge to your advantage. Run a competitive process. Don’t anchor to just one buyer type. Play them off each other. Create urgency by showing how your business fits both strategic and financial objectives.
Also, when speaking with financial buyers, highlight your EBITDA story. Show how efficient you are and how scalable your operations could become. Help them see the path to 3x or 4x their investment, even at a high entry multiple.
If a strategic buyer is offering less, remind them of synergies. They may be underestimating the boost your team, tech, or customer base could bring to their core business.
13. Strategic buyers represented 70% of M&A deals involving hardware or semiconductors
When hardware is involved, strategics take the lead
In deals that involve hardware or semiconductors, strategic buyers are the key players—owning 70% of those M&A transactions. That makes sense. These are complex products. They require integration with existing infrastructure, supply chains, and R&D. It’s not a space for generalist investors.
Companies like Intel, Nvidia, and AMD aren’t just buying IP. They’re acquiring know-how, patents, and teams that can help them stay competitive in an industry where milliseconds and nanometers matter.
Why financial buyers shy away
Hardware often involves inventory, physical production, and long lead times. That means working capital constraints, slower growth curves, and regulatory oversight. All of which makes these deals harder to structure with debt or typical private equity playbooks.
In contrast, strategic buyers already operate in the space. They know how to value a chip design team or evaluate the impact of a fab acquisition. They’re also better equipped to absorb integration risk.
What hardware startups need to focus on
If you’re building in this sector and eyeing an exit, think strategically—literally. Your ideal buyer is likely someone already in the hardware game.
Make your value to them obvious. That could mean a breakthrough in energy efficiency, faster processing speeds, or lower cost of production. Show how your IP fills a specific gap.
Also, protect your patents. Strategic buyers care deeply about defensibility. A weak IP position can kill a deal, even if the tech works.
And finally, focus on building strong relationships with potential acquirers early. These companies often make acquisitions through existing partnerships or JVs. If you can co-develop something or get on their radar through a pilot, that’s a great first step.
14. Financial buyers were involved in 48% of tech carve-outs in 2023
Carve-outs attract financial buyers looking for focused bets
Carve-outs happen when a company sells off a business unit, product line, or division. In 2023, financial buyers participated in nearly half of these deals in tech. These buyers see opportunity where others see distraction.
To them, a neglected or non-core division from a larger company might be a goldmine if given the right focus, leadership, and investment.
Why financial buyers love carve-outs
The dynamics of a carve-out are perfect for a PE firm. They can acquire a business that’s already operating, often with customers and revenue, but has room for immediate improvement. Once it’s free from the parent company, they can revamp operations, align incentives, and grow aggressively.
They also often get favorable terms, especially if the seller wants to offload quickly.
How to prepare a business unit for a carve-out
If you’re running a division that might be carved out, start thinking like an independent company. Build standalone financials. Create separate systems for HR, finance, and operations. Make sure contracts, licenses, and leases can be transferred.
If you’re advising a larger company, help them identify which units are truly non-core. Highlight how a carve-out can unlock value—not just for the buyer, but for the parent company as well.
Once you enter carve-out discussions, be ready to negotiate terms around transitional services. Financial buyers will need temporary support—from IT to payroll—as they spin out the unit. A well-planned TSA (Transition Services Agreement) can make or break these deals.
15. In the Asia-Pacific region, financial buyers made up 41% of tech M&A deal volume in 2023
Asia-Pacific is seeing rising interest from financial buyers
Historically, strategic buyers dominated the tech M&A scene in Asia-Pacific. But in 2023, financial buyers stepped up in a big way—accounting for 41% of deal volume. That’s a big jump and signals growing confidence in the region.
Private equity firms and funds are seeing Asia not just as an emerging market—but as a place to deploy capital with real returns.
Why financial buyers are drawn to APAC now
There’s a perfect storm of conditions. Rising tech adoption, growing digital infrastructure, and favorable demographics make the region appealing. At the same time, valuations in some countries are lower than in the U.S. or Europe, making it a value-buying opportunity.
Also, local governments in countries like India, Indonesia, and Vietnam are supporting innovation through policy. That adds stability.
What founders and companies in Asia should do
If you’re in the Asia-Pacific region, you now have more paths to exit than ever before. Financial buyers are open to backing local winners or rolling them up into regional leaders.
To attract them, focus on scale potential. These buyers want to see that your model can expand across borders or verticals.
Make sure your books are transparent and investor-ready. Many Western financial buyers expect U.S. GAAP or IFRS reporting. Having this in place removes friction.
Also, prepare for cultural diligence. Buyers will want to know how your leadership style, hiring practices, and customer relationships play out locally. Showcase your understanding of the local market and how it creates defensibility.
16. Strategic buyers closed 64% of tech M&A deals in Europe during 2022
Europe leans toward strategic deals
In 2022, strategic buyers led nearly two-thirds of all tech M&A activity across Europe. This shows how large corporations—not just in Europe, but from around the world—are targeting the region for innovation, regional expansion, and market penetration.
With a mature economy, strong regulatory environments, and rising tech hubs in cities like Berlin, Amsterdam, and Stockholm, Europe is a prime target for strategic investment.
Why strategics dominate here
Strategic buyers are often better suited to navigating Europe’s complex regulatory and cultural landscape. Unlike financial buyers, they typically already have local operations, legal teams, and a footprint in one or more EU nations. That makes integration smoother and compliance easier.
They’re also motivated by product synergies and customer expansion—things that are often easier to pursue when there’s already local presence and brand equity.
How European founders can attract strategic acquirers
Focus on the long-term value your company brings to a larger ecosystem. Strategic buyers in Europe look for innovation that complements their existing business lines—whether that’s in fintech, healthcare, AI, or sustainability.
Make sure your team speaks the same language as your acquirers—not just linguistically, but operationally. Use metrics that are commonly understood by corporate development teams (ARR, retention, net dollar expansion). Ensure your legal structure and IP rights are clearly documented and enforceable across borders.
Engage early. European deals tend to take longer due to regulatory steps and conservative due diligence. The more time you invest in relationship-building, the easier the process becomes when the M&A conversation begins.
17. 50% of tech M&A deals led by strategic buyers had a post-merger integration timeline of less than 12 months
Strategic buyers move quickly after the handshake
Half of all tech deals led by strategic buyers complete post-merger integration (PMI) within a year. That’s fast. Especially in tech, where people, systems, and product stacks all need to align, merge, or be rebuilt.
This stat speaks volumes about how prepared strategic buyers are when they make a move. Integration isn’t an afterthought—it’s often part of the deal plan from the very beginning.
Why quick integration matters
Strategic buyers want value realization as soon as possible. Whether that’s cross-selling, reducing costs, or speeding up innovation, they don’t want to wait around for it. That’s why many of them assign dedicated PMI teams that start planning before the deal even closes.
Fast integration also limits disruption. The longer a company sits in limbo between old and new leadership, the greater the risk of culture clash, talent attrition, or customer confusion.
What founders need to prepare for
If you’re selling to a strategic buyer, expect the integration process to start during due diligence. You may be asked about your systems, vendors, HR policies, data privacy practices, and even how your support tickets are handled.
Don’t be caught off guard. Start documenting key processes now. Identify team members who could take on leadership roles during the transition. And prepare to align with the buyer’s internal tools—whether that’s CRM, HR software, or financial reporting systems.
You should also be ready to let go of some tools, habits, or decision rights. If the buyer is aiming for a unified platform, they’ll want to sunset overlapping systems quickly. The more collaborative and flexible you are, the smoother that transition will be.
18. Financial buyers accounted for 57% of tech M&A deals backed by private equity sponsors in 2023
PE sponsors are driving more than half of tech deals
In 2023, private equity-sponsored transactions made up a major portion of tech M&A, with financial buyers backing 57% of those deals. These sponsors are increasingly active in the sector, using both platform acquisitions and add-ons to build scale, diversify risk, and unlock value.
PE firms are no longer just observers in tech—they’re active builders, shapers, and exit planners.
What makes PE sponsors unique
They typically have a three- to seven-year horizon. During that time, they’re laser-focused on driving EBITDA, improving operations, and growing enterprise value. Then, they exit—either through a sale, IPO, or recapitalization.
What separates PE-sponsored buyers from other financial players is structure. They often bring in operating partners, create detailed value-creation plans, and set aggressive benchmarks from day one.
How to align with this buyer type
If you’re approached by a PE-backed firm or sponsor, ask about their vision for your business. They’ll usually have a playbook, and you need to understand where you fit in. Will you be an add-on or a platform? Will your team remain in control or report to a new CEO?
Also, prepare for heavy diligence. PE firms will review every aspect of your company—from revenue composition and margins to contracts and compliance.
If you’re looking to attract this kind of buyer, highlight your scalability and operational levers. Can pricing be optimized? Can gross margins expand? Can your go-to-market model be refined?
And finally, build a strong leadership team around you. PE sponsors look for companies where the CEO isn’t the only person holding things together. The more durable your org chart, the more attractive your company becomes.
19. Strategic buyers led 80% of tech M&A deals involving AI and machine learning startups under $50M
AI startups under $50M are magnets for strategic buyers
The AI gold rush isn’t being led by investors—it’s being driven by strategics. In deals under $50 million, 4 out of 5 acquisitions are made by companies looking to integrate AI into their existing products and platforms.
These aren’t bets on future profits. They’re bets on capability. Strategic buyers want to bring AI in-house to sharpen their edge in everything from customer experience to data analytics to automation.
Why small AI startups are so appealing
They’re nimble, specialized, and often built by brilliant technical teams. A $20M AI startup may have built something that would take a Fortune 500 company years to replicate internally.
Also, these startups often aren’t profitable yet, which makes them unattractive to financial buyers. But for a strategic, that’s fine—as long as the tech is useful and the team is skilled.
How AI founders can appeal to strategic buyers
Focus on real-world use cases. Strategics care less about theoretical accuracy rates and more about business impact. Can your model improve customer support? Reduce fraud? Optimize logistics?
Make sure your IP is protected and clearly assigned to the company. Strategic buyers will want to know they can own and deploy your models safely and globally.
Also, be prepared for integration. These buyers aren’t looking to run your company as a standalone—they want your team to join their org and apply your technology across their portfolio.
So start thinking about how your AI can scale inside a larger system. Build APIs, prepare documentation, and design your models with portability in mind.
20. Financial buyers drove 65% of roll-up strategies in healthtech and fintech sectors
Roll-ups are a favorite tool for financial buyers
In verticals like healthtech and fintech, financial buyers led nearly two-thirds of all roll-up deals in 2023. Roll-ups involve acquiring multiple smaller companies in a space, then combining them into a larger, more valuable entity.
This strategy works especially well in fragmented markets—where no single player dominates and there are many subscale operators with solid offerings.
Why healthtech and fintech are ripe for roll-ups
Both sectors are loaded with point solutions. In healthtech, you’ll find startups solving one problem—like appointment scheduling or claims processing. In fintech, you’ll see tools for payments, lending, or expense tracking.
Financial buyers look at these markets and see an opportunity: bundle solutions, reduce overhead, cross-sell across customers, and create a full-stack platform that commands a higher multiple.
How to benefit from a roll-up strategy
If you’re a founder in one of these sectors, consider this: you may not need to be the biggest to be valuable. You just need to be the right piece of the puzzle.
Focus on niche excellence. Serve a specific use case deeply and profitably. Then make yourself known. Attend industry conferences, connect with PE-backed platforms, and share thought leadership in your space.
When talks begin, ask the buyer about their vision. Will your brand stay intact? Will your team remain in place? Or are they centralizing everything under one umbrella?
And finally, prep for integration. If you join a roll-up, you’ll need to align your systems, pricing, and team culture with others. The easier you make that shift, the more leverage you’ll have in the negotiation.
21. Strategic acquirers conducted 61% of M&A deals focused on expanding product capabilities
Product-driven deals are mostly strategic
When the goal of the acquisition is to expand product capabilities, strategic buyers are leading the charge—accounting for 61% of such deals. That’s because product synergy is where they find the most value. If your product fills a key gap in their offering, they want you on their team.
These deals aren’t about short-term financials. They’re about customer satisfaction, ecosystem depth, and roadmap acceleration.
Why this makes sense
Strategic buyers know that building from scratch takes time. It’s often faster—and smarter—to acquire a product that already works. If a startup has built something that customers love, and it complements an existing offering, that’s a shortcut to market leadership.
These acquisitions are common in SaaS, infrastructure, and developer tools—where modular products can be easily added to a suite.
What founders need to do
Make sure your product narrative is clear. Show where you sit in the value chain. Help potential acquirers visualize how your product can expand their use cases or improve retention.
Map out overlaps and potential bundling opportunities. If your tool can help a bigger player increase ARPU or reduce churn, say that outright.
And don’t downplay your roadmap. Strategic buyers often look for innovation potential. Show what’s coming next and how it fits into broader trends.
Finally, be prepared to stick around. Product-focused acquisitions usually come with integration responsibilities for your team. You may be leading a new division or helping internal teams build on what you’ve created.
22. 69% of platform acquisitions in vertical SaaS were led by financial buyers
Vertical SaaS is a playground for financial buyers
In vertical SaaS—software built for a specific industry like legal, construction, or real estate—financial buyers are dominating platform plays. Nearly 70% of these platform acquisitions were led by financial buyers in 2023.
They see vertical SaaS as reliable, sticky, and under-optimized. A perfect opportunity to roll up similar companies and drive scale.
Why vertical SaaS is attractive
It’s specialized, which means high switching costs and loyal customers. Plus, it often serves markets that are large but underserved by generic tools. That makes room for improvement and growth through professionalization.
Financial buyers know that once they acquire a platform, they can add more features through follow-on deals, increase pricing, and optimize sales and support.
How to become a platform candidate
Position your company as the hub—not just a feature. Financial buyers want to build around you. So your product should be essential to daily workflows, have high usage frequency, and serve as the system of record.
Highlight customer retention, average contract value, and your position within the industry. If you’re already the go-to software for a niche, that’s gold.
Make sure your internal operations are clean. PE firms will look at your org chart, systems, and cash flow closely. The more they can trust your foundation, the more likely they’ll see you as a viable platform for growth.
23. Financial buyers accounted for 55% of tech M&A exits for VC-backed startups in 2023
PE firms are now major exit paths for VC-backed startups
In a shift from the traditional playbook, financial buyers were behind 55% of all VC-backed startup exits in 2023. That means founders are increasingly finding their exits not in IPOs or strategic sales—but in deals with private equity buyers.
This signals a maturing market. Many VCs are realizing that PE firms offer liquidity, scale, and structure—even if the exit isn’t as flashy as a public debut.
Why this matters
For startup founders, this expands the exit horizon. You don’t need to be the next Stripe to find a good home. If your business has strong recurring revenue, solid margins, and a clear growth path, a PE firm may be your ideal buyer.
These buyers bring discipline and resources. They may want you to stay on as CEO—or transition out gradually. Either way, they’re focused on value creation, not vision alignment.
How to prepare for this type of exit
Understand what PE buyers want: clear financials, strong customer retention, and scalable go-to-market. They’ll model your business deeply, so have your data room ready early.
If you’ve raised multiple VC rounds, clean up your cap table. Overly complex ownership can slow down a deal.
Also, be open-minded. PE buyers may offer partial exits, allowing you and your team to de-risk while still growing the company under their umbrella.
Most importantly, know your value. Don’t undersell your startup just because the acquirer isn’t a big-name tech brand. A quiet but well-structured deal with a PE firm can sometimes be the best path for long-term impact—and wealth creation.
24. 77% of big tech acquisitions ($1B+) from 2018–2023 were led by strategic buyers
When it’s a billion-dollar deal, strategic buyers usually lead
From 2018 to 2023, nearly 8 out of 10 tech acquisitions worth over $1 billion were led by strategic buyers. That’s a clear trend. Big companies like Amazon, Google, and Microsoft are willing to write huge checks to stay ahead—and they see large acquisitions as a core strategy, not a last resort.
These aren’t just financial bets. They’re ecosystem shifts. When a strategic buyer acquires a billion-dollar company, it changes the market.
Why strategics dominate this space
Large acquirers have the resources, risk appetite, and post-acquisition support systems needed to absorb big companies. They also often have a clear strategic rationale—maybe the target brings massive users, infrastructure, or proprietary tech.
Think of Facebook buying WhatsApp. Or Google buying Fitbit. These deals were about long-term advantage, not short-term profits.
What it means for scale-stage startups
If you’re playing at the $1B valuation level, know that strategic buyers are watching. They may have already mapped you as a target. But don’t wait for the call. Build relationships. Invite corp dev teams to your events. Keep conversations casual but consistent.
You’ll need to demonstrate not just scale—but strategic fit. What can you help the buyer do better, faster, or differently?
Prepare for long diligence cycles and high internal scrutiny. Big deals attract attention—both from media and regulators. Having your governance, compliance, and legal structure in place reduces risk and builds trust.
And remember, big exits don’t happen by accident. They’re usually the result of long-term strategic positioning and partnership cultivation.
25. Strategic buyers had a 30% lower deal abandonment rate compared to financial buyers
Strategics are more likely to close the deal
In M&A, not every signed LOI turns into a closed deal. But when a strategic buyer is at the table, your chances improve significantly. Their deal abandonment rate is 30% lower than that of financial buyers.
This makes sense. Strategic acquirers are often more deliberate. They’ve vetted the fit internally, gained executive buy-in, and mapped out integration before making an offer.
Financial buyers, by contrast, are more valuation-sensitive. If the market shifts or diligence uncovers issues, they’re more likely to walk away.
Why this matters to sellers
The cost of a broken deal is high. Legal fees. Team distraction. Lost momentum. So knowing who’s more likely to see it through matters. If you’re fielding offers, consider not just the price—but the reliability of the buyer.
Strategics tend to move slower upfront but close more often. Financial buyers may act fast—but back out if the deal stops meeting their model.
How to reduce abandonment risk
Regardless of who’s buying, increase your odds by being transparent early. Don’t hide skeletons. Be clear about risks and dependencies.
Also, don’t overpromise. If your forecasts are inflated or your pipeline isn’t real, diligence will expose that.
Finally, build strong relationships during the process. Deals are emotional as much as financial. If the buyer feels aligned with your vision and team, they’re more likely to push through hurdles.
If you’re looking to close with certainty, strategics may offer more peace of mind—even if their process takes longer.
26. Financial buyers were responsible for 60% of secondary buyouts in tech during 2023
Financial buyers are driving the secondary market
In 2023, financial buyers made 60% of all secondary buyouts in tech. A secondary buyout happens when one PE firm sells a company to another. It’s not a public exit or a strategic acquisition—it’s a handoff from one investor to another.
These types of deals are common when the original PE firm has hit its value-creation goals and the next phase of growth needs a different owner with new capabilities or a longer time horizon.
Why this model works
The first PE firm may have cleaned up operations, improved cash flow, or expanded the customer base. But it may not want to stick around for the next big product investment or global expansion. That’s where the second buyer steps in.
For them, it’s a less risky bet. They’re buying a company that’s already been institutionalized, has strong management, and has proven results.
What founders should know
If you’re owned by a PE firm now, a secondary buyout might be your next step. It’s not a failure. It’s a signal that your company is valuable and still has room to grow under new ownership.
You’ll need to show how the business can continue expanding. Maybe there’s international growth ahead. Maybe there’s a product refresh. Maybe you’re ready to scale sales.
Either way, you’ll want to stay prepared. Keep financials clean, keep your team stable, and understand where your next chapter of growth could come from. If you do, you’ll be in a strong position to attract that second wave of interest.
27. 85% of distressed tech asset acquisitions were made by financial buyers in 2023
Financial buyers are leading in distressed acquisitions
Distressed assets are companies that are struggling—financially, operationally, or both. In 2023, 85% of such acquisitions in tech were led by financial buyers. That’s because these buyers are experienced in turnaround situations and comfortable with risk when the price is right.
They see distressed assets not as broken, but as underutilized.
Why strategics often stay away
Strategic buyers typically avoid distressed deals. They’re resource-heavy and can come with brand, culture, or technology baggage. Corporates also have stakeholders and public scrutiny to worry about, making these acquisitions too risky.
Financial buyers, on the other hand, can be more surgical. They may strip non-performing parts, replace leadership, and renegotiate contracts. Their goal is clear: fix the business, improve the financials, and exit at a higher multiple.
How to approach this scenario
If your company is in trouble, a financial buyer may be your best path forward. But you have to be honest—about your position, your team, and your options.
Prepare a short, factual overview of your assets, IP, and customer base. Be transparent about liabilities, contracts, and debts. Financial buyers won’t shy away from problems—but they do want clarity.
Also, be open to changes post-acquisition. A turnaround usually means new leadership, new systems, and tough calls. But if the alternative is shutting down, this path could save jobs, products, and long-term potential.
28. Strategic buyers were more likely to pay with stock—used in 42% of their deals vs 18% for financial buyers
Stock is the preferred currency for strategic buyers
Strategic buyers used stock in 42% of their tech M&A deals—more than double the rate of financial buyers, who only used it in 18%. That tells us a lot about how these two buyer types think about capital, alignment, and structure.
When a strategic buyer pays in stock, it signals long-term interest. They want sellers to share in the upside. It also shows financial discipline—they’re conserving cash and using equity instead.
Why this matters to sellers
Getting paid in stock has pros and cons. The upside is that you get to ride the wave of a larger company. If they grow post-acquisition, your shares could appreciate significantly.
The downside? You’re tied to their fate. If the stock drops, so does your payout.
That said, many founders like this structure. It shows the buyer is invested in your future and wants alignment.
What to consider when stock is on the table
Ask about the lock-up period. Will you be able to sell stock soon—or will it be tied up for months or years?
Understand tax implications. Stock deals can have different treatment depending on your jurisdiction and holding period.
Also, look at the buyer’s historical performance. Are they known for stock stability or volatility? Review analyst reports and earnings history. The more confidence you have in the stock’s future, the more attractive the deal becomes.
If you’re offered both cash and stock, ask for modeling on both options. Don’t be afraid to push for a mix that aligns with your risk profile.
29. 62% of strategic buyer-led deals included earnouts, compared to just 28% for financial buyers
Earnouts are more common with strategic buyers
Earnouts are deal terms where part of the payout is tied to future performance. And in 2023, 62% of strategic buyer-led deals used them, compared to only 28% of deals led by financial buyers.
That tells us strategic buyers want alignment. They want to make sure the business performs after closing, especially if they’re relying on the founder or team to stick around.
Why this happens
Strategics often buy companies for growth potential, not current cash flow. That makes earnouts attractive—they’re a way to reduce risk while still offering upside to the seller.
Financial buyers, by contrast, are more numbers-driven. If they buy you, they’re already convinced by your current performance. They’re less likely to need post-deal incentives.
How to navigate earnouts
First, understand the terms. What metrics are tied to the payout? Revenue? EBITDA? Customer retention? Make sure they’re measurable, achievable, and aligned with your control post-acquisition.
Second, ask who owns the decision-making. If you’re expected to hit certain numbers but no longer control marketing, sales, or pricing, that’s a red flag.
Third, get it in writing. Every detail should be clear—timelines, formulas, caps, and contingencies.
Earnouts can be great. They allow you to prove your value and earn more. But only if the structure is fair, transparent, and gives you the tools to succeed.
30. Strategic buyers showed a 20% higher average deal success rate in post-acquisition integration compared to financial buyers
Strategics win at integration
Once the deal is done, the hard work begins. And strategic buyers are 20% more likely to succeed at post-acquisition integration compared to financial buyers. That means smoother transitions, better team retention, and faster value realization.
Why? Because they’ve usually done it before—many times.
They also often have in-house integration teams and playbooks. They think about culture, process alignment, and customer messaging before the ink is dry.
Why financial buyers fall short here
PE firms may be great at operations and modeling, but integration is a different beast. They often rely on external consultants or acquired management teams to make it work. If those teams aren’t aligned or experienced, integration can get messy.
Also, strategic buyers typically want synergy—shared customers, systems, and products. That gives them a roadmap to follow. Financial buyers may not have that same clarity.
What this means for sellers
If integration matters to you—because of your team, your customers, or your mission—ask detailed questions upfront. What’s the integration plan? Who’s leading it? How long will it take?
If you’re staying on, push to be involved. Your insight can prevent missteps and speed up adoption.
If you’re exiting completely, look at earnouts or retention bonuses tied to successful integration milestones. That creates incentives for everyone to make it work.
Ultimately, the end of a deal is just the beginning. And if you care about what happens next, selling to a strategic buyer might be the safer path.
Conclusion
Tech M&A is no longer a simple transaction—it’s a chessboard where every move reveals intent, strategy, and long-term thinking. Whether you’re a founder aiming for an exit, a corporate exec leading buy-side deals, or a stakeholder navigating the acquisition landscape, knowing the difference between strategic and financial buyers is critical.
