Technology mergers & acquisitions title page

Tech M&A taps the brakes, but opportunity still lies ahead 

After hitting a peak in 2021, tech mergers and acquisitions have entered a new phase of consolidation to meet demand for more comprehensive platforms.

January 12, 2024
3 minutes

Editor's note: The T3 Tech Guide, now in its third edition, provides in-depth research and analysis to help leaders understand the forces shaping residential real estate. This exclusive series of excerpts highlights takeaways from the latest Tech Guide, which was released in October 2023.

Technology M&A: Innovation drives action in the development of software and tools, and each year key trends emerge. One of the most significant recent trends is the slowdown of technology company mergers and acquisitions. However, M&A continues to move forward, with product-focused deals leading the way.

Real estate technology mergers and acquisitions have slowed considerably in the last year due to mortgage rates rising, inventory shortages and general market uncertainty. But that does not mean the consolidation wave has ended. Many companies are still hunting for solutions to flesh out their end-to-end platforms that help them better leverage their scale, expand their offerings and grow their customer base.

Significant market opportunity remains for consolidation as agent adoption of technology increases and many vendors seek to deliver more comprehensive platforms.

With real estate transaction volumes decreasing, many brokers and agents are pausing their investments and purchasing decisions with technology applications and services. This market dynamic is causing smaller technology vendors to contemplate selling their businesses to accelerate go-to-market capabilities with larger companies that have proven sales and marketing capabilities, align with companies or investors that have healthier balance sheets, and to aid with completing the end-to-end platform the industry is demanding.

From 2019 through September 12, 2023, there were 45 real estate technology acquisitions, with the peak year of 2021 with 18 acquisitions.

chart showing residential real estate technology acquisitions from 2019-2023

T3 Sixty categorizes technology acquisitions into the following three types:

  • Product development: Acquirer goal of offering a larger selection of products to the same customers.

  • Market penetration: Acquirer goal of taking out a competitor and growing its market share.

  • Market development: Acquirer goal of developing or expanding into a new market.

In that over four-and-a-half-year timespan, product development acquisitions were the most prevalent, with 26. Market penetration and market development acquisitions were roughly equal in that span at nine and eight, respectively.

Top takeaway

The landscape of real estate technology M&As has cooled off due to various market uncertainties, but significant opportunities for consolidation still exist.

Brokerages and agents are becoming increasingly cautious in their tech investments, causing smaller vendors to consider acquisition strategies to gain scale and resources. Amid this backdrop, product development remains the primary driver for acquisitions, as companies seek to provide end-to-end platforms to better serve their clients.

Read the full report: Digital copies are available for free at T3 Trends.

Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.

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