No Match Found
The technology, media and telecommunications (TMT) sector’s structural growth continues to make it a highly attractive area for investment and M&A in both the medium and longer term. Digitalisation is more important than ever because businesses urgently need to innovate, reconfigure and transform in response to dynamic market conditions and emerging technology, such as artificial intelligence (AI).
In the shorter term, TMT M&A activity has been affected by many of the same factors facing dealmaking globally—namely capital constraints, high interest rates, geopolitical tensions and regulatory scrutiny. All these factors have dampened TMT M&A deal volumes and values in the first half of 2023, and we expect the second half of the year will likely follow a similar pattern. We are optimistic current valuations will trigger further strategic deal opportunities.
We discuss below some of the key themes we see influencing how the M&A markets will play out for the remainder of 2023.
‘M&A activity in TMT is picking up in 2023 due to improving investor confidence and a dynamic and growing market in the technology sector.’
‘Streaming players are facing intense competition and challenges such as rising content costs, subscriber retention, and now the added wrinkle of a US writers’ strike. In a fragmented market facing slower growth prospects, I believe there will be consolidation as companies take action to strengthen their positions and gain a competitive edge.’
TMT remains the most active sector for M&A despite capital constraints and geopolitical tensions creating global headwinds for deal activity. However, strategic avenues remain for capital deployment. Companies with strong balance sheets can afford to be opportunistic and differentiate themselves from their peer group as they expand their technical capabilities and drive innovation and transformation. Others, with more capital constraints, may face greater challenges. PE firms remain attracted to the TMT sector because of business models with high margins and strong cash flows.
About the data
We have based our commentary on M&A trends on data provided by industry-recognised sources. Specifically, values and volumes referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by Refinitiv (LSEG) as of 30 June 2023 and as accessed on 3 July 2023. Certain adjustments have been made to the source information to align with PwC’s industry mapping, and it has been supplemented by additional information from S&P Capital IQ and our independent research and analysis.