The AI mania’s aftermath: risk premiums at historic lows
The Equity Risk Premium has collapsed to just 1.6%, less than half its long-term average of 3.5%. Meanwhile, the Fear & Greed Index has surged into Extreme Greed territory.
The Equity Risk Premium has collapsed to just 1.6%, less than half its long-term average of 3.5%. Meanwhile, the Fear & Greed Index has surged into Extreme Greed territory.
For Tech M&A, this isn’t just a market signal: it’s a warning. We’re not yet at dot-com era multiples, but the pattern rhymes: AI-driven growth stories are being bid up while the relative yield over Treasuries has nearly disappeared.
When you’re moving at the speed of 300 KPH for 600 kilometers, it only takes a small stone to cause a major accident. The margin of safety is razor-thin, and valuations are increasingly pricing in perfection.
In the private markets, there is a major adage: "we make profit at the buy, not at the exit". That truth is sharper than ever in Tech M&A, where discipline at entry, rigorous due diligence, and performance-linked purchase price mechanisms are essential to avoid overpaying in an overheated cycle that echoes the late ’90s playbook.
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Eighteen years in investment management, M&A and financial technology. A CFA Charterholder, he leads investment analysis, valuation and fund structuring across Significa's advisory and investment practices, and teaches valuation and fund structures in the CVC Builder curriculum. Concurrently Chief M&A and Growth Officer at AlternativeSoft in London; co-founder of MarkeScope, which developed the first stock-screening solution to incorporate risk measures. Treasurer of CFA Society Egypt; BSc Electrical, Electronics and Communications Engineering, Cairo University.