Goldman Sachs tech bankers say we're at dot-com-level dealmaking — and here's where it's coming from

"When we look ahead, it feels like, barring some piece of macro volatility, it's going to continue to be a constructive environment for tech M&A," Sam Britton, head of technology, media, and telecom mergers and acquisitions, recently told Business Insider.

"It really feels like to me it's an extension of what we were seeing last year, just busier and more pronounced," Britton said.

Behind it all is an ongoing drive for technology among industrial companies and other nontech companies wanting to get exposure, especially to software. This started 18 months to two years ago, but has grown at an exponential rate for the past several quarters, Ryan Limaye, cohead of global technology banking, told Business Insider.

"While the broader economy is growing, tech has been the greatest growth area in the economy for a long period of time," he said. "As a result, many companies that are not labeled as tech companies want more tech in their portfolio."

Much of the activity so far this year has been in the enterprise (or business-focused technology) and software sectors, a theme that started last year and has continued to pick up.

"Clients are thinking very big, very bold, very aggressively" this year, Limaye said. "They are very interested in doing things — that generally means M&A and, to a lesser degree, financing."

One major area of interest within enterprise, which Limaye defines loosely as "not consumer" technology, is software-as-a-service, or SaaS. Last year saw an uptick in SaaS deals, including Oracle's $9.3 billion deal for NetSuite, Samsung's $8 billion deal for Harman, and Symantec's $4.7 billion deal for Blue Coat. Limaye expects that trend to continue.

Other sectors include artificial intelligence and machine learning. Interest in those types of companies is very high, Limaye added, and there aren't very many assets to go around.

And then there is the Internet of Things, technologies that connect physical devices, like vehicles or warehouse equipment, via the internet.

"It appeals massively to nontraditional tech," Limaye said. Here, too, there is a shortage of assets. That means that for the assets that do get bought, higher prices are being paid. And incumbent companies are finding more ways of getting exposure to them, whether through acqui-hiring or bulk recruiting.

Major cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud will also continue to roll out new services, Limaye said. As each one makes new developments, it increases the pressure on competitors to keep up.

Like night and day

In terms of the broader macro backdrop for tech M&A going forward, it helps that many recent deals have gone so smoothly. "I do think the macro, recent self-reinforcing data points mean the environment is good," said Britton.

One caution, however. With talk of tax reform and cash repatriation on the horizon under President Trump's administration, some buyers could wait before deciding to spend money on deals.

Cash repatriation would still be a net positive for the tech M&A market, Britton said, but it could mean things get put on hold until there is more clarity. So far, that hasn't been the case, but it's something worth looking out for.

Still, many historically acquisitive tech companies have not made any big deals recently and could have plans in the works. Of the big five tech companies — Google, Apple, Facebook, Amazon, Microsoft — only Microsoft did a large deal last year.

Limaye said that Goldman's annual technology conference, which took place in February, hosted more than 1,000 people this year, including some 800 investors and several hundred companies.

At one point during the conference he showed up for a lunch only to find out it had run out of food. "The contrast from this time last year is like night and day," Limaye said.