Megabuyte CEOBarometer podcast with Ian Spence

This quarter's CEOBarometer spotlights subdued trading conditions, faltering investment flows, and the selective rise of AI. Organic growth has slowed across the board—Software companies posted 13% growth, while ICT Services lagged at 7%. The deceleration is sharpest in consulting services, where low recurring revenue and discretionary budget cuts have driven many businesses into stagnation. In contrast, recurring revenue models continue to provide resilience in Software, where growth has largely stabilised at pre-COVID levels. Despite these challenges, standout performers in areas like cybersecurity and defence—such as Bridewell, DIGI2AL, and FSP—are still delivering strong double-digit growth, proving that execution and sector positioning remain critical. The investment landscape also reflects mounting caution. UK-listed tech valuations have dipped below 10x EV/EBITDA, IPO activity remains stalled, and private equity deal volumes have halved year-on-year. Meanwhile rising debt levels and cash interest payments continue to cause stress for some. While top-tier software firms continue to command strong multiples, ICT Services valuations—particularly in consulting—have seen a significant reset. Venture funding tells a two-speed story: capital remains available for late-stage, AI-native businesses such as Quantexa and Luminance, but pre-Series A funding has collapsed, narrowing the pipeline for future investment. As the sector recalibrates, this episode offers critical insights into where growth is holding up, where confidence is fading, and what tech leaders need to consider as they navigate another year of cautious optimism and selective momentum. About this podcast Our quarterly podcast offers a clear, strategic perspective on the forces shaping the UK tech sector—M&A, capital flows, valuations, AI, and more. Hosted by Megabuyte's Founder & Chairman, Ian Spence, and Megabuyte's Head of Research & Consulting, Neel Arampatta, the CEOBarometer is designed for CxOs of scale-ups and mid-market companies who value depth over noise. Learn how at www.megabuyte.com or search ‘Megabuyte for CxOs'. Skip to: Growth Outlook 01m 37s Capital Markets 22m 20s Private Equity 33m 57s Venture & Growth Capital 55m 56s M&A 01h 01m 18s    

In this month's podcast: As we enter 2025, this month's Megabuyte CEOBarometer adopts a slightly different format. Like last January's episode, this month's show runs to an hour to provide a comprehensive round-up of the past year and set the scene for the year ahead. The podcast begins with a 12-month retrospective, revisiting key technology and growth trends, corporate activity data, and a look back at our 2024 predictions to assess their accuracy. Building on these insights, we then turn to our forward-looking predictions for 2025, offering perspectives on the themes that will shape the year ahead. This month's predictions touch on all the usual topics covered in the podcast but also feature a focused segment on AI, which remains a pivotal agenda item for UK tech leaders. So, in summary, we were pretty bullish at the start of last year about the outlook for 2024. However, while the year proved stronger than 2023, persistent corporate caution and political uncertainty limited the pace of recovery. Deal activity remained more muted than expected, with capital markets notably poor, while private equity remained relatively robust. Looking ahead, with the exception of capital markets, we expect a gradually improving picture for corporate activity and valuations. This month's show captures all these themes in detail, providing a balanced look back at 2024 and forward to what lies ahead in 2025. Transcript available here or save for offline by hitting 'Download' above About this podcast The CEOBarometer podcast is a quarterly publication hosted by Ian Spence, Founder and Chairman of Megabuyte. In each episode, Ian provides expert analysis of key trends in UK tech M&A, capital markets, private equity, and venture capital, and explores their implications for the boards of UK tech companies. Megabuyte supports UK scale-up and mid-market Software and ICT Services companies to develop robust growth strategies, understand their competitive landscape and customer sentiment, benchmark their financial performance and valuation, and identify and track M&A targets. Learn how at www.megabuyte.com or search ‘Megabuyte for CxOs'. Skip to: Tech Trends 01m 05s       - AI Predictions for 2025 04m 50s Growth Outlook 19m 47s Capital Markets 27m 29s Private Equity 37m 00s Venture & Growth Capital 39m 12s M&A 41m 41s 5 Key Recommendations for Boards 44m 16s

In this month's podcast: Finally, some good news! UK tech sector share prices and valuations actually saw some meaningful improvement in November, making it a positive month for the sector across the board. As expected, M&A volumes were strong, boosted by pre-budget deals, with ICT Services activity seeing a particularly notable pop. Private equity had a strong showing too, with a 10% year-on-year rise in deals, driven largely by MBOs making a return after some time. Even the downtrodden venture capital sector had a good month, raising over £500m - its best month since May - thanks to increasingly clear AI drivers. Of course, the capital markets didn't get the memo and logged yet another month of no meaningful deal activity. Save for offline by hitting 'Download' above About this podcast The CEOBarometer podcast is a monthly publication hosted by Ian Spence, Founder and Chairman of Megabuyte. In each episode, Ian provides expert analysis of key trends in UK tech M&A, capital markets, private equity, and venture capital, and explores their implications for the boards of UK tech companies. Megabuyte supports UK scale-up and mid-market Software and ICT Services companies to develop robust growth strategies, understand their competitive landscape and customer sentiment, benchmark their financial performance and valuation, and identify and track M&A targets. Learn how at www.megabuyte.com or search ‘Megabuyte for CxOs'. Skip to: News Analysis 00m 48s Capital Markets 05m 12s Private Equity 08m 45s Venture & Growth Capital 14m 46s M&A 20m 54s

In addition to the usual analysis of corporate activity and valuations, this month's ‘spotlight' is on growth trends, providing an overview of current market growth rates, some context on where we are relative to recent highs and lows, and our view on the outlook. In particular, we analyse why, as Software sector growth remains robust, parts of the ICT Services sector still have some way to go. M&A activity received the expected pre-budget boost, though this impact has yet to be fully reflected in the numbers, and private equity activity remained strong across both MBOs and SBOs. In contrast, capital markets saw another weak month, with share prices, corporate activity, and valuations all underwhelming. Venture capital investment remains subdued, though select deals hint at a potential medium-term recovery. With the budget behind us, modest growth should resume as decision-making picks up. About this podcast The CEOBarometer podcast is a monthly publication hosted by Ian Spence, Founder and Chairman of Megabuyte. In each episode, Ian provides expert analysis of key trends in UK tech M&A, capital markets, private equity, and venture capital, and explores their implications for the boards of UK tech companies. Megabuyte supports UK scale-up and mid-market Software and ICT Services companies to develop robust growth strategies, understand their competitive landscape and customer sentiment, benchmark their financial performance and valuation, and identify and track M&A targets. Learn how at www.megabuyte.com or search ‘Megabuyte for CxOs'. Skip to: News Analysis 00m 48s Capital Markets 11m 26s Private Equity 14m 11s Venture & Growth Capital 21m 49s M&A 27m 34s

In addition to our customary monthly updates, this month's show has an AI flavour as we analyse the latest product announcements from key players, revealing what they signal about AI adoption trends and spotlighting three critical takeaways. Meanwhile, in our monthly analysis of share prices, valuations and corporate activity: After a positive summer for share prices in the UK tech sector, September was disappointing with flat prices, in line with the UK market but underperforming a resurgent US market. Deal activity was also muted, with a 25% year-on-year drop across all categories. Private equity was particularly quiet after a very busy August; venture capital remained depressed, especially at either end of the size spectrum; and M&A numbers were soft, although we anticipate a tsunami of pre-budget deals in October and November. About this podcast The CEOBarometer podcast is a monthly publication hosted by Ian Spence, Founder and Chairman of Megabuyte. In each episode, Ian provides expert analysis of key trends in UK tech M&A, capital markets, private equity, and venture capital, and explores their implications for the boards of UK tech companies. Megabuyte supports UK scale-up and mid-market Software and ICT Services companies to develop robust growth strategies, understand their competitive landscape and customer sentiment, benchmark their financial performance and valuation, and identify and track M&A targets. Learn how at www.megabuyte.com or search ‘Megabuyte for CxOs'. Skip to: News Analysis 00m 48s Capital Markets 10m 23s Private Equity 13m 02s Venture & Growth Capital 18m 59s M&A 22m 48s

While it feels like most tech CEOs are getting on with the new norm, the statistics over the summer tell a different story. While UK tech sector share prices were solid across July and August, and valuations are generally stable, corporate activity in all categories was down, even in the otherwise resilient private equity sector, where weak MBO numbers mean that year-to-date deal volumes are now flat. M&A activity also remains muted with increased polarisation between ICT Services and Software, with the latter enjoying decent deal volumes and some chunky transactions over the summer. The same goes for venture and growth capital, where activity is stubbornly refusing to recover. Some of this weakness is likely to result from the decision to delay liquidity events made after the snap election was called. But now, many will be waiting to see the details of inevitable tax changes coming in the budget. Skip to: News Analysis 01m 00s Capital Markets 10m 37s Private Equity 18m 18s Venture & Growth Capital 25m 44s M&A 31m 38s

As we head into the summer lull, June was relatively quiet on the corporate activity front, although the massive valuation on Preqin's sale to Blackrock certainly caught the eye. Trends observed this year have persisted, with strong private equity volumes contrasting with ongoing, though moderating, weaknesses in M&A, venture capital, and capital markets activities. Meanwhile, notwithstanding the undoubted success of the Raspberry Pi IPO, UK tech sector share prices and quoted valuations remain at near 10-year lows after another soggy month, especially for software. However, the outlook for the second half of the year looks increasingly bright, with improving sentiment, greater political stability – in the UK at least – and the likely start of a period of downward movement in interest rates. Skip to: News Analysis 04m 41s Capital Markets 08m 27s Private Equity 12m 18s Venture & Growth Capital 16m 06s M&A 19m 26s

The patchy recovery continued in May, marked by a notable pop in UK share prices. Trading conditions continue to be mixed but are improving overall, while evidence of the gap between the AI haves and have-nots is growing. Regarding corporate activity, private equity continues to be the bright spot; fundraising numbers clearly suggest that VC has turned a corner, but it was another flat month for M&A. Meanwhile, there's good and bad news on the IPO front. The good news is that Raspberry Pi has pulled the trigger on its IPO, and it seems to be going well, which may precipitate others in the sector to follow suit. The bad news is that the founder and former CEO of WANdisco is trying to make a return to public company life just months after he presided over the near-collapse of that company. You really couldn't make it up! Skip to: News Analysis 05m 39s Capital Markets 12m 56s Private Equity 19m 44s Venture & Growth Capital 22m 53s M&A 25m 27s

Over the last year, I've been working on a major research project on AI strategy. The genesis of this research programme was an AI-focused panel session at the 2023 Megabuyte CEOStrategy Offsite. The depth of audience engagement in that panel session, but also what appeared to be a lack of clear thinking around strategy on AI, left me in little doubt that there was more research needed in this critical area. So I set about sense checking that interpretation with multiple CEOs. And the consensus was clear - there is a strong desire, or perhaps imperative is a better word, to advance AI strategies despite prevailing uncertainties. The question, of course, is how? So, leveraging Megabuyte's expertise in transforming evidence-based analysis into actionable insights for CEOs, we set out to provide a contextualised AI strategy framework for the boards of UK scale-up and mid-market tech companies. The objective for tech companies in applying this framework is to optimise shareholder value by leveraging AI in the most effective and appropriate way, focusing on its integration into product strategy, operations, and also into corporate strategy. Our research at Megabuyte indicates that the UK tech sector is entering a phase of disruption as seismic as that of the early 2000s. In this context, strategic decisions made in the next two to three years will have undoubtedly have a disproportionate impact on shareholder value over the medium to long term. The future certainly presents both vast opportunities but also significant threats to growth and valuations. The key question is how we can determine what good looks like in terms of AI strategy. At Megabuyte we're privileged to have unique access to some 500 tech company boards here in the UK, and over the past year we solicited the views from many of the CEOs and CTOs in that network, and we triangulated them with our own research in order to answer this vitally important question. Our Strategy Framework Report synthesises insights from these interviews along with our own research and is now available to download free of charge from our website. In this special episode of the Megabuyte CEOBarometer, I will talk you through key takeaways from that report. But there's more in store. This report serves really as just Phase One of our research. The next step is to apply our framework to key technology sub sectors and delve deeper into the themes and get some more detailed insights within those parts of the market. And that will be for the benefit of our subscribers. If you're already a Megabuyte subscriber and you're interested in participating in this element of the research, please just do drop me a line or contact the person you speak to most frequently at Megabuyte. I fundamentally believe that this is the single most important strategic decision that every tech company, and indeed every company full stop, will face over the next decade.  

In April, some familiar trends became more pronounced in the UK tech sector - the most striking of which was the increasing juxtaposition of confidence levels between private equity and the capital markets. There were no fewer than four billion-dollar private equity deals announced - the Darktrace P2P and SBOs from Focus, Rimes, and Zellis – with only three small follow-on offerings in reply from the stock market. Soggy share prices once again only served to underline the stock market gloom, even if we did outperform NASDAQ for a change. Venture capital continues to bump along the bottom with another very quiet month for deals, as does M&A with another sub-50 transaction month, although both of those areas are actually showing underlying improvement if you look hard enough. Meanwhile, trading news from UK tech companies continued to be mixed, but, here again, the trend is gradually improving. Skip to: Spotlight Get involved in our AI Research Project 04m 18s Your Monthly CEOBarometer News Analysis 06m 06s Capital Markets 14m 42s Private Equity 18m 08s Venture & Growth Capital 23m 08s M&A 25m 26s    

March was a busy month for public company results, painting a solid picture overall.  Nonetheless, there were notable exceptions as share prices and public company valuations remained stagnant. Looking at deal flow, a superficial analysis of the data suggests that activity levels in March mirrored those of January and February – and were notably lower than the levels achieved in Q1 2023. While this observation holds true, it overlooks some crucial underlying trends, the most striking of which is the significant surge in private equity activity, with deals up 2.5 times from March 2023. Similarly, although M&A deal statistics were generally lacklustre, this masks some really interesting M&A activity in the software sector, particularly in fintech. Venture capital fundraising rebounded after an exceptionally poor February, with fintech deals also playing a significant role. Skip to: News Analysis 04m 55s Capital Markets 12m 47s Private Equity 15m 07s Venture & Growth Capital 20m 25s M&A 23m 59s

February in the UK tech sector continued to prove the notion that downturns are sudden and universal whereas recoveries are slow and patchy. While some companies report improved trading, others are still finding it hard going, especially those focused on the financial services sector. Share prices were weak in the UK but much stronger in the US, evidencing an emerging (and worrying) trend that the UK is not benefiting from the AI bounce. Deal volumes remain subdued, with similar trends to the previous month with solid private equity numbers, ongoing weakness in M&A volumes, especially in ICT services, and essentially no fundraising activity in the capital markets. Meanwhile, February was a record low month for VC fundraising as later-stage deals completely evaporated but there is increasing evidence of an underlying recovery giving confidence for improved deal flow as we move through the year. Skip to: News Analysis 05m 05s Capital Markets 11m 44s Private Equity 17m 49s Venture & Growth Capital 21m 56s M&A 24m 26s

It has been a rather subdued start to the year in most parts of the UK tech sector, but the overall picture does seem to be improving. Trading news, of which there has been plenty, is broadly positive with the emphasis very much on utilising operational leverage to build back to the Rule of 40. Share prices on both sides of the Atlantic consolidated recent gains, but UK stock market corporate activity is still at rock-bottom. Once again, private equity activity was robust with SBOs leading the way, while VC and M&A activity continued the stable trends established in the last few months of 2023. While it remains a bumpy ride, the recovery does seem slowly to be gathering momentum. Skip to: News Analysis 04m 54s Capital Markets 09m 47s Private Equity 13m 41s Venture & Growth Capital 19m 41s M&A 23m 56s

As we kick off 2024, this month's Megabuyte CEOBarometer follows a slightly different format. In addition to reviewing all of the key share price and corporate activity trends for 2023, this month's show is all about looking forward to the coming year and beyond. We present on our 10 key predictions for 2024, exploring tech demand trends, valuation dynamics, and the outlook for corporate activity. Focused on actionable insights, we also share five key recommendations for tech company Boards looking to capitalise on these trends. So what of 2023? While the recovery was slower than expected to get going, the signs were there towards the end of the year, with stronger share prices and increased secondary buyout activity coming through.  As we look forward to 2024, we expect those signs of recovery to gather momentum, but there will undoubtedly still be bumps along the way given a patchy macro-economic recovery, ongoing geo-political uncertainly and continuing high interest rates. So what will equip UK tech companies to successfully navigate those choppy waters as we head into the second half of the decade?  Our view is that it is those companies with progressive Chapter 2 and AI strategies that stand to take the lion's share of the growth and attract premium valuations. Skip to: 2023 Year in Review 01m 53s      - Share Prices 01m 53s      - Deal Activity 05m 18s 2024 Key Trends 12m 40s 5 Key Recommendations for Boards 28m 46s

In this month's podcast: Finally, there's some positive news to discuss regarding UK tech share prices, as they surged by 11% in November, hinting at the first signs that investors anticipate brighter prospects ahead. Let's hope that this upturn proves to be sustainable this time. Unfortunately, that's where the positive developments for this month largely conclude. Trading conditions remain challenging, and indications from FDM and Kainos updates suggest a continued deterioration. Moreover, activity in capital markets, mergers and acquisitions, as well as venture capital, was notably feeble in November, with only private equity activity remaining robust. This was particularly evident in secondary buyouts, most notably observed in the case of Civica, which have been scarce lately as investors await confirmation of the new norms for valuations. Looking ahead to 2024, the data suggests that the year will be a mirror image of 2023, starting off poorly but gradually improving. For a comprehensive overview of our annual predictions, make sure you tune in to January's CEOBarometer podcast.

In this month's podcast: After a brief summer uptick, the UK tech sector faced a Q4 setback, grappling with tough trading conditions, escalating costs, and, in some cases, excessive leverage. October's 5% drop in tech sector share prices pushed valuations to a decade low, dimming the optimism sparked earlier in the year. Capital investments from venture capitalists hit a five-year low, and apart from public takeovers, M&A activities stagnated. While the private equity market offered some relief, deal flow remained below last year's levels. Despite the prevailing gloom, history reminds us that in moments of despair, recovery often begins to take shape, hinting at brighter prospects ahead.

In this month's podcast: The market adapts to the 'new norm' of higher interest rates and lower valuations, witnessing a thaw in the SBO market and a resurgence in VC funding in September. However, persistent weakness in M&A volumes, burdened by increased debt servicing costs, prevails. Tech share prices, especially in software, hit a 5-year low, hindering the revival of capital markets deal activity.

In this month's podcast: The summer got off to a roaring start with strong share prices and enhanced corporate activity, but August rolled back much of the gains. Overall, UK tech sector share prices were broadly flat across July and August, modestly underperforming the wider market, and the picture was similar in the US. Public company valuations have largely stabilised at their lower levels but there is still some price discovery going on in the private equity world. Kerridge's buyout by CapVest was a particularly interesting case in point. Indeed, it was surprising strong period for PE transactions, especially MBOs, and we also saw the return of the P2P after a few months' absence. After a torrid few quarters, VC also looks like it's over the worst but M&A activity remains somewhat subdued. Overall, the outlook feels a lot stronger than it did in June and evidence is growing to support a meaningful recovery next year.  

In this month's podcast: While UK tech sector share prices were stronger in June, valuations remain stubbornly low, especially in ICT Services. Meanwhile, the US tech sector continues its rapid recovery with a 33% jump in the tech-heavy NASDAQ so far this year compared to just 7% in the UK. Nevertheless, confidence in capital markets does seem to be recovering, albeit from rock bottom levels, with more fundraising and M&A activity amongst listed businesses. Likewise, AI-driven green shoots continue in the UK tech VC market where deal numbers were better than they have been all year. Conversely, the private equity outlook is less positive, with activity remaining slow, especially in secondaries, and M&A volumes were also weak, albeit better than a very quiet May. So, as we head into the second half of the year, it will be fascinating to see if this changing of the guard continues and confidence builds in UK tech capital markets and UK tech VC.

June: It's quiet out there people! Weakening confidence finally spills over into M&A and private equity.

May: Reasonable deal stats hide underlying disquiet while medium-term clouds are gathering for private equity investors.

April: What a difference a month makes: the UK tech sector marks time as the mini banking crisis weighs heavily on sentiment while the quoted markets are rocked by the WANdisco sh*t show.

March: Growth rates continue to revert to the mean; the toughest of comps for VC fundraising; while PE remains rock solid

February: Stronger share prices belie continuing caution in many parts of the tech sector, as anecdotal evidence of tougher trading slowly grows. 

January: Our 12 key predictions for the UK tech sector this year

December: Share prices move from stability to recovery as PE activity slows and it's a bumper month of ICT Services M&A activity. 

November: Despite clear signs of a trading slowdown in enterprise tech spending, Trans-Atlantic share prices hold steady. And in news that will surprise no-one, private equity deals continue apace.

October: The share price rout returns after a brief summer lull as we wait to see how the coming recession impacts trading.

September: A lacklustre summer rally belies a continuation for first half trends. But no-one seems to be talking about the trading outlook?

July: Capital markets activity reaches rock bottom … VC continues to trend downwards … but the private equity guys continue to make hay  

June 2022: Oh dear, this is getting serious! The VC bubble is bursting and share prices are continuing to fall… someone needs to let the PE guys know that the party's over!

May 2022: After another tough month, share prices and deal volumes are largely back to pre-pandemic levels, but where do they go from here?

April 2022: Private equity and M&A activity normalises, capital markets deal flow slows and VC megadeals are noticeably absent; blip or new trend?

March 2022: Has the correction arrived? Will the market uncertainty triggered by recent geo-political events extend to deal volumes & valuations?

February 2022: With tech share prices dropping on both sides of the Atlantic, what next for corporate activity and valuations?

January 2022: 2021 may have ended on a high, but are steadier-state deal volumes and valuations pointing to a more ‘normal' 2022?

December 2021: M&A overtakes private equity in snaring MBO targets; £1bn fund raise emerges as the monthly venture capital ‘new norm'; and valuation inflation continues.

November 2021: While digital halos start to slip on the public markets, the M&A resurgence continues with data management and process automation the new flavour of the month.

October 2021: Troubled waters ahead? We think so, as valuations continue to overheat in both public and private markets.

September 2021: We report on the July & August silly season as UK tech share prices soar and deal flow records continue to be broken.

July 2021: Records are made to be broken: We analyse the UK tech IPO bonanza looking set to deliver the best performance of the decade, and a bumper month for deal volumes and valuations.

June 2021: Specialist data consultancies – the new darling of the investor community? London-listed companies go transatlantic and the rise of digitally-powered healthcare solutions providers.

May 2021: A return to steady-state corporate activity; transatlantic capital markets rev up and growth and venture capital steal a march on private equity.

April 2021: Effervescent deal activity; private capital hotspots; and IPO and SPAC momentum gathers pace.

March 2021: Private equity hot(ter) spots, stock market inflation jitters, more signs of the digital IPO wave and SPACs make their presence felt.

February 2021: Despite a tentative start to the year for capital markets, later-stage VC and mid-market PE power ahead evidencing our bullish outlook for 2021.

January 2021 - Company Financials & Trading Update: Stock market highs, a record month for corporate activity, resilience becomes confidence and the arrival of SPACs.

January 2021 - Markets & Deals Update: Stock market highs, a record month for corporate activity, resilience becomes confidence and the arrival of SPACs.

December 2020: Upbeat markets and valuations, the return of mid-market private equity and why NOW is the time to evaluate strategy.

November 2020: The country may be heading into ‘Lockdown 2.0' but corporate activity and financial performance in the UK tech and digital sector continue to demonstrate remarkable resilience. In particular, mid-market private equity is back with a bang, and M&A activity continues to return to pre-COVID levels, especially in Enterprise Software. I discuss the key deals and valuation trends. Also this month, the wave of IPOs seems definitely now to have reached European shores and I look at where the next IPOs might come from - and where they won't. On trading, the picture remains broadly positive but there is something of an SME-shaped cloud on the horizon.

October 2020: As deal activity continued to recover in September; despite lockdown uncertainty, I take a look at ‘Chapter 2' investment trends in venture and growth capital as well as recovering M&A and mid-market PE activity. Although share prices were more muted in September after a very strong run, the US IPO market continued its resurgence with some eye-watering valuations to match. Are these sustainable and will the IPO gold rush be exported to Europe? The signs are there. On trading, as well as more indications of resilience, I comment on horrible results from WANdisco.