Technology Mergers and Acquisitions: Key Risks and Opportunities
Cultural differences between merging entities, bumpy integration processes and regulatory challenges are among the leading risks to successful mergers and acquisitions for technology companies, according to recent research by Travelers.
Tech firms sit at the epicenter of this fast-moving marketplace, where artificial intelligence breakthroughs arrive weekly, cyber threats evolve by the hour and regulatory boundaries continue to shift. In this climate, mergers and acquisitions (M&As) and private equity (PE) deals have become a core strategy for fueling innovation, expanding product portfolios and staying ahead of relentless competition.
To uncover what’s driving M&A and private equity activity, Travelers surveyed more than 800 risk professionals for its M&A Risk Study. The outlook is optimistic: 88% of the 101 technology respondents say their most recent transaction was a success. Still, even successful transactions faced challenges – from cultural mismatches and integration issues to regulatory hurdles.
Insights drawn from the study’s data help explain why tech M&As are surging, where hidden risks lie and how CFOs and risk leaders can turn disruption into durable advantage.
What’s spurring growth in technology M&A deals
In 2024, tech transactions topped $450 billion across more than 3,300 M&A deals. While deal count slipped a modest 2%, the median value more than doubled – signaling a decisive tilt toward fewer, higher-stakes acquisitions. PE transactions helped drive the shift: PE deal value rose 14.5%, and median transaction size jumped nearly 50%.1
Top motives inducing technology M&A deals
- AI everywhere – From foundational models to chip foundries and data centers, opportunities for AI in technology is prompting cash-rich incumbents to buy specialized talent and intellectual property (IP) rather than build from scratch.
- Cybersecurity pressure – As threats escalate, firms are acquiring niche security companies to tighten their security and reassure customers.
- R&D cost and speed – Buying proven codebases or semiconductor capabilities can shave years – and potentially millions of dollars – off internal development timelines.
How these drivers translate into deal activity varies by subsector and region.
IT software and services now account for roughly 80% of tech deal count and value, while telecom deal value surged 130% year over year on megadeals like EchoStar’s $26 billion acquisition of DISH Network in January 2024.2
Geographically, the West Coast continues to lead with about 25% of deal volume. Notably, New England and the Great Lakes saw double-digit growth – a sign that talent and venture capital funding are spreading beyond Silicon Valley. Meanwhile, the Mid-Atlantic continues to attract cybersecurity firms seeking proximity to federal clients and agency contracts.3
Top risks and integration challenges in technology M&As
The impressive scale and pace of tech deals create opportunity – but also risk. And the real stress test often begins after the ink dries, when integration plans shift from theory to execution. The Travelers Technology M&A Report shows just how much disruption can unfold during this period when the time comes to merge company cultures and operations. From operational shake-ups to workforce turbulence, Travelers’ study helps uncover the reality of the impact of a merger or acquisition on a workforce.4
- 77% rolled out new tools or processes.
- 77% changed leadership teams.
- 73% had some employees quit.
- 71% redrew reporting lines.
- 66% changed roles.
- 56% relocated staff.
- 43% shut down offices.
- 39% conducted layoffs.
Those early shocks rarely stay contained. Instead, they often concentrate into four risk areas that, if left unchecked, can siphon value from even the most strategic acquisition.
System integration is a key challenge to technology M&A success
Operations and technology systems integration remains one of the most significant challenges for technology M&As. And according to Travelers research, more than one-third of tech leaders flag system compatibility as their top concern.5 Hidden costs, operational inefficiencies and cybersecurity vulnerabilities often surface unexpectedly, emphasizing the critical need for rigorous due diligence and proactive planning.
Cybersecurity risk mitigation is a priority for technology M&As
A merger or acquisition often results in the integration of the separate entities’ IT systems. This expands the potential attack surface for opportunistic cybercriminals and increases overall exposure to cyber threats. This can undermine data integrity, put multiple workstreams at risk and lead to untold disruptions and failures, before during and after the closing of the deal. Identifying vulnerabilities early and aligning cyber protocols is critical to securing the combined enterprise.
Protect intellectual property in technology mergers and acquisitions.
Intellectual property (IP) is the crown jewel in most tech acquisitions, but ownership chains can be murky, especially with open-source code or joint-development agreements. Neglecting comprehensive IP due diligence can lead to legal disputes, unexpected liabilities and disruption of innovation processes.
Talent retention and cultural integration are critical to successful technology mergers and acquisitions
Cultural integration remains a critical yet frequently overlooked aspect of M&A success. Leadership swaps, role changes and relocations can fray morale fast. Clear communication, credible career paths and retention packages for critical engineers can turn uncertainty into renewed commitment.
Addressing these four areas early – and treating risk management as a growth lever and not a cost center – can turn short-term disruption into long-term resilience.
How tech firms use best practices to strengthen risk management after M&As
Most tech acquirers are good at adapting quickly, according to the Travelers study. More than 90% say their risk-management practices changed post-deal, and 94% believe their programs are now stronger.6 The Travelers Special Report reveals how they got there:7
- 49% implemented new risk management practices.
- 44% updated physical safety protocols.
- 43% engaged new suppliers.
- 42% added tech-specific safety measures.
- 38% shifted carriers or brokers.
- 32% adjusted insurance coverage.
- 25% hired a new risk manager.
When done right, M&As strengthen a company’s overall risk posture. Getting there requires thoughtful execution – and best practices can help pave the way.
Pre-deal cyber assessments
Conduct thorough due diligence to uncover integration risks and build alignment plans. Embed cybersecurity frameworks early, perform structured post-close audits and prioritize ongoing workforce training.
Detailed operational planning
Create integration road maps that address technology, compliance and supply chain processes to reduce disruption. Rigorous IP audits and meticulous documentation of asset ownership should be integral to the diligence phase, safeguarding against costly oversights and preserving strategic advantages.
Transparent communication
Prioritize early, frequent and clear communication to manage expectations, reduce uncertainty and support employee retention.
Tailored insurance solutions
Use specialized insurance products and risk management tools to address the unique exposures of technology merger and acquisition plans.
2025 Technology M&A Study: A Travelers Special Report
Is your organization prepared for the risks and complexities of technology M&As? Explore the Travelers 2025 Special Report on M&As for deeper insights into what technology risk teams need to know.
How to create long-term value in technology M&A deals
Technology acquirers can gain an edge by preparing early for a wave of regulatory and market pressures – from AI-related risks and social media litigation to shifting trade policies that could reshape global markets. As deal values continue to rise, particularly in software and semiconductors, the need for proactive integration planning and stronger safeguards becomes even more critical.
Act now to establish a solid footing because tomorrow’s headwinds are already on the radar.
Contact your Travelers representative to craft insurance and risk management solutions built for next-generation growth.
Sources
1, 2, 3 PitchBook Data, Inc., pitchbook.com
4, 5, 6, 7 2025 M&A Study: A Travelers Special Report
