Matt Sondag is a managing director in West Monroe Partners’ Chicago office. He is responsible for expanding and deepening the firm’s unique offerings to the private equity market, including its merger and acquisition services.
Q. WHAT TRENDS ARE YOU SEEING IN THE TECH SPACE?
More and more companies are moving to the cloud, releasing “control” of their systems and data. Cloud security is improving, and there is a recent increase in hosting providers (e.g., Amazon Web Services) willing to sign business associate agreements (BAAs) to host protected health information (PHI). This provides considerable opportunities for companies in the health care space that didn’t exist 12 to 18 months ago. We’re also seeing more companies leverage tablet and mobile solutions to enable their workforce and streamline business processes. We’ve all probably experienced this in a retail store where the checkout process is now mobile. Finally, the term “big data” has been hyped over the last two years, but it’s finally starting to deliver real value. It’s helping companies predict the “what” (not so much the “why”) and drive customer interaction (e.g., predictive purchasing, fraud).
Q. WHAT OPPORTUNITIES DO YOU SEE FOR THE MIDDLE-MARKET PE FIRMS THAT WANT TO INVEST IN TECH COMPANIES?
It’s certainly an exciting time to invest in technology companies. The business intelligence or big-data space is very hot and will continue to deliver more practical solutions for customers. The gathering of data (structured and unstructured) will continue to increase, and different industries are finding ways to extract value. The messaging or communication space is red hot, but also competitive. The recent acquisition of WhatsApp by Facebook might sound expensive, but it really wasn’t when you consider its per user valuation ($42) was a third of Twitter’s ($127). The security space also will provide big opportunities, especially in managed services (annuity-based revenue). Big security breaches like the one at Target Corporation last December shine a spotlight on the need for advanced security to both protect a company’s brand reputation as well as stay ahead of hackers who are becoming more sophisticated. Lastly, I think we’ll also see a movement of security plays that move beyond B2B and into B2C.