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Artificial Intelligence (AI) M&A Update 1H 2024

Report: Artificial Intelligence in a Growing M&A Landscape, 1H 2024

Quick Answer

Solganick's 1H 2024 AI M&A update highlights a continued uptrend, with 195 AI-related technology deals recorded in Q2 2024 as enterprises increasingly acquire AI capabilities. AI emerged as the best-funded venture sector in Q2 2024, attracting $24 billion into startups, yet older AI companies face valuation pressure in a "buyer's techquisition" market. This trend is driven by AI's disruptive impact, prompting companies to buy rather than build essential AI technologies.

Artificial Intelligence in a Growing M&A Landscape Industry Report by Solganick

July 12, 2024 – Solganick has published its latest M&A update on the artificial intelligence industry sector as of 1H 2024.

Acquisitions of AI-related companies in Q2 of 2024 accounted for 195 technology deals, down from 2021 highs but continuing a recent uptrend. The following summarizes the highlights of the report:

  • 2023 was AI’s “year in the sun” as OpenAI’s Chat-GPT exploded onto the consumer scene. AI was cited as the most impactful disruptive technology industry by business executives surveyed by Gartner. We see enterprise focus on the technology priming high levels of acquisitiveness for the remainder of 2024, as companies “buy” important AI capabilities that they otherwise won’t “build.”
  • Recent venture investment bears this thesis out, $24 billion flowed into AI startups in Q2 2024. AI became the best funded venture sector for the first time, and 5 of 6 billion-dollar deals went to AI companies. Deal count was down while overall investment was up.
  • Uncertain macroeconomic conditions and lingering questions about a “soft landing” in the US conspire to create harsh funding conditions for older AI startups, who may need to seek alternatives in M&A. It will be a buyer’s “techquisition” market as valuations face pressure.
  • Crystalizing use cases in the nascent AI industry will drive clarity and conviction for dealmakers in the coming months and years.

Download Report: Artificial Intelligence in a Growing M&A Landscape

About Solganick

Solganick is a data-driven investment bank and M&A advisory firm focused exclusively on software and IT services companies. Artificial Ingelligence mergers and acquisitons has been  a subsector of expertise within the firm for 5+ years. For more information, please contact us.

Frequently Asked Questions

1 What were the main trends in Artificial Intelligence M&A during the first half of 2024?

The first half of 2024 saw 195 AI-related technology deals in Q2, continuing a recent uptrend. Enterprises are increasingly acquiring AI capabilities rather than building them, driven by AI's disruptive impact.

2 How has venture capital investment influenced the AI M&A landscape in 1H 2024?

AI became the best-funded venture sector in Q2 2024, with $24 billion flowing into AI startups. However, uncertain macroeconomic conditions are pressuring older AI startups to seek M&A alternatives.

3 What are the current market conditions for AI company valuations and acquisitions?

The report indicates a 'buyer's techquisition' market, where valuations face pressure. Crystalizing use cases in the nascent AI industry are expected to drive clarity and conviction for dealmakers in the coming months.

4 Why are companies increasingly looking to acquire AI capabilities rather than develop them internally?

Business executives view AI as the most impactful disruptive technology. Companies are choosing to acquire AI capabilities to quickly gain important technology that they might otherwise not be able to build efficiently.