AI M&A Activity Lower Middle Market
Artificial Intelligence M&A by Year
(In Billions of USD)
Total Deal Size in ($B) # of Deals
From 2020 to 2024, there has been a significant increase in the acquisition of AI startups by major tech companies, aimed at enhancing their technological capabilities and market positions. 2021 marked a significant surge in sector-specific AI investments, particularly in healthcare, where AI-powered solutions offered the promise of groundbreaking advancements in diagnostics and patient care. Furthermore, the pandemic- induced surge in remote collaboration across industries, a trend that persists into 2024, has underscored the growing demand for sophisticated AI technologies to maintain a competitive edge. From 2023 to 2024, the value of M&A deals increased by 8%. In 2024, AI-related M&A activity surged as companies sought to capitalize on the growing potential of generative AI and other advanced technologies. The AI sector is expected to witness continued strong M&A activity, driven by companies seeking to acquire new capabilities, technologies, and market access. Large tech companies like Microsoft and Alphabet are leading the charge by acquiring AI startups to bolster their own capabilities. As AI adoption continues to rise, driven by its ability to deliver tangible business value — such as cost savings and revenue growth — the M&A landscape is expected to remain active. The digital transformation accelerated by the COVID-19 pandemic has further emphasized the potential of AI to redefine workflows and drive disruptive change across industries.
97
2.2
6.3
4.6
3.1
3.3
2020
2021
2022
2023
2024
M&A Volume by Quarter
Total Deal Size in ($B) # of Deals
(In Billions of USD)
60
56
53
50
40
36
35
33 31
29
29
27
27
25
22 26 19 23
20 22
0.7 0.5 0.3 0.5 0.9 1.7 1.8 1.9 1.9 1.5 0.6 0.7 0.7 0.7 0.9 0.7 0.6 0.6 1.1 1.1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021 2022 2023 2024
Source: PitchBook, Forbes, Harvard Business Review, TechCrunch, McKinsey & Company.
Source: Pitchbook as of 31 December 2024.
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