A clear divide has emerged in today’s technology acquisition market.
Datasite reports TMT deals surged 17% in late 2024, and this increased activity is made up of two distinctly different approaches: companies pursuing traditional market share growth through speculative purchases, and strategic acquirers who view every deal through the lens of customer value enhancement. This fundamental transformation extends beyond mere deal volume, with the distinction between approaches becoming a critical predictor of which acquisitions deliver sustainable returns and which become costly mis-steps in today’s challenging market.
A Tale of Two Approaches
The rules of M&A are being fundamentally redefined. While some organisations continue to chase acquisitions primarily for market share or technological capabilities, the true market leaders are taking a different approach. These companies understand that successful acquisitions aren’t about having the most advanced technology or grabbing market share – they’re about pursuing a clear vision for how each deal will enhance customer experiences and solve real challenges.
This isn’t just idealism; it’s the new competitive advantage. Companies that anchor their acquisition strategy in demonstrable customer value aren’t just buying assets – they’re buying better ways to drive satisfaction and retention. In today’s market, that’s what separates transformative deals from expensive distractions.
This strategic divide is particularly relevant given the current market where tighter capital conditions and stakeholder scrutiny mean the margin for error in M&A decisions has never been smaller.. With over 100 London-listed companies departing in 2024 and the London Stock Exchange’s decline in global IPO rankings, there’s mounting pressure on organisations to demonstrate genuine value creation through their corporate activities.
The Evolution of AI Acquisitions
Artificial Intelligence (AI) has emerged as the primary catalyst driving technology M&A activity. The increasing availability and maturity of AI technologies, coupled with breakthroughs in AI-driven processes and generative AI, has positioned software as the driving force in M&A within the TMT sector. As AI moves beyond the hype cycle in 2025, organisations are shifting focus from attention-grabbing implementations to invisible, value-driving solutions that seamlessly enhance operations and customer experiences. This evolution reflects a broader recognition that AI capabilities are becoming critical to maintaining competitive advantage, with practical applications spanning data analysis, automation, and language processing driving value creation across industries.
Software dominated technology M&A in the first half of 2024, with PwC reporting that these deals represented 70% of the top ten transactions by value – totalling over USD 70 billion. This trend is exemplified by recent deals such as BioNTech’s £562m acquisition of UK-based InstaDeep and Microsoft’s £16m investment in Mistral AI, as organisations increasingly opt to acquire rather than build AI capabilities internally, separating market leaders from those still demonstrating AI for AI’s sake.
However, the true differentiator lies in how companies approach these acquisitions. Take Amplitude’s acquisition of Command AI. Rather than simply adding AI capabilities to their portfolio, the move explicitly focused on solving specific customer challenges around software usability and personalised user assistance. This exemplifies a broader shift in how successful companies are approaching AI acquisitions – with a clear focus on practical applications rather than theoretical capabilities.
The Path Forward
Tech acquisitions in 2025 will demand clear paths to value creation as deal activity picks up amid stabilising interest rates. While M&A activity showed limited recovery in late 2024, deal value rose nearly 20 percent year-on-year to £46.5bn, suggesting companies became more selective about their acquisitions.
In key sub sectors such as software-as-a-service, cybersecurity, and cloud computing, the focus has shifted from pure market presence to practical implementation and user impact. . The challenge lies in ensuring every corporate action strengthens the value proposition to end users. In 2025, this measured approach to acquisitions will be the defining factor between industry leaders and followers, determining which companies can translate technological capabilities into meaningful market advantages and sustained growth.
About the Author
Lee Edwards is Vice President of Sales in EMEA at Amplitude. Amplitude is a leading digital analytics platform that helps companies unlock the power of their products. More than 3,200 customers, including Atlassian, NBCUniversal, Under Armour, Shopify, and Jersey Mike’s, rely on Amplitude to gain self-service visibility into the entire customer journey. Amplitude guides companies every step of the way as they capture data they can trust, uncover clear insights about customer behavior, and take faster action. When teams understand how people are using their products, they can deliver better product experiences that drive growth. Amplitude is the best-in-class analytics solution for product, data, and marketing teams, ranked #1 in multiple categories by G2’s Summer 2024 Report.
