New study from technology industry analyst firm Transforma Insights analysing mergers and acquisitions in the AI space during 2021-2023 found that deal volume remained steady in 2023 after substantial growth in 2022, and that the US ICT sector dominates in terms of acquisitions.
This week Transforma Insights has published a report, ‘The state of AI acquisitions 2021-2023: Big Tech leading the charge’, examining the key trends in M&A in the Artificial Intelligence space during the period 2021-2023. A total of 461 AI deals were analysed during this period, considering deal count, deal value, sector, geographies of the buyer and target company, and the focus areas of the acquisitions.
The key findings were as follows:
Between 2021 and 2022 the number of deals more than doubled, from 83 to 191. However, they subsequently plateaued in 2023, with 187 deals. There is no particular trend in the size of deals, with bigger deals being quite evenly distributed over the period.
In total across the period, 51% of deals were worth USD50 million or less. 11% were valued at more than USD1 billion, with Microsoft’s acquisition of Nuance Communications being the largest at USD19.7 billion.
Unsurprisingly the leading sector as both acquiring entity and target is Information and Communications Technology (ICT). The account for 27% of acquiring companies and 48% of target companies. Much of AI continues to be cross-vertical making acquisitions skew towards enhancing a broad AI capability rather than a specific vertical.
The most active buyers were Accenture, Alphabet, Apple, Databricks, Microsoft and Snowflake.
Over the period 2021-2023, two-thirds of the buyers that acquired AI companies were headquartered in the US. Europe is the next largest region, representing 17% of buyers. Asia accounts for 8%.
In terms of the target companies, half of acquired companies were headquartered in the US. Europe accounted for 30%, with UK, Germany and France the biggest individual countries.
As part of the analysis, our analysts examined which use cases were supported by the target firms. The range of potential use cases for AI is broad. The most common focus of acquired companies was Natural Language Processing, followed by Workflow Optimisation, Image Processing & Analysis, and Personalised Marketing.
This report ‘The state of AI acquisitions 2021-2023: Big Tech leading the charge’ focuses on analysis of Artificial Intelligence (AI) acquisitions completed between January 2021 to December 2023. A total of 461 AI deals have been analysed during this period based on the deal count, deal value, sector, geographies of the buyer and target company, and the focus area of the acquisition. For example, there has been lot of buzz around Generative AI, since the launch of ChatGPT and Microsoft’s investment in Open AI in 2021. This has led to an increase in the acquisition of organisations that use or develop AI products using Natural Language Programming (NLP) and Machine Translation.
The analysis of these acquisitions provides an outlook on the state of the AI market over the past three years based on multiple attributes such as investment range, geographic focus, AI use-cases/ deployment focus area, target sectors, and deal value (where available).
If you have questions concerning the methodology, either general or specific to a particular application or vertical sector, don’t hesitate to contact our analysts.
