Technology, Media and Telecom (TMT)
TMT Digital Transformation
For more than two decades, we've reviewed a broad cross-section of market research studies. We select summaries of those reports that provide the most thought-provoking insights about the many disruptive changes shaping free-market competition within the Global Networked Economy.
The closely related Technology, Media and Telecommunications (TMT) industries are already undergoing a transformation -- as innovative products or services are developed by collaborative teams of creative contributors and brought to market at an accelerated rate.
The combined Technology, Media and Telecom market size is currently estimated at $5.1 trillion -- with the communications sector consisting of about a quarter of that total.
About two billion people -- or one third of the world’s population -- are currently online. About 1.5 billion personal computers are currently in use. The next billion people who want to access the Internet will likely use a mobile device, for economic reasons – such as a smartphone or a low-cost media tablet.
Across each business sector, the incumbent company's prior legacy leadership is now being challenged by a multitude of new market entrants -- as previously protected closed value-chains and artificial restraint-of-trade practices are being bypassed.
The resulting market freedom enables unprecedented opportunity for those entrepreneurial pioneers who dare to experiment with new business models and associated forward-looking market development processes.
The legacy vendors and service providers are not excluded from this activity. In fact, they often have the competitive advantage, because they can easily build upon their existing infrastructure and market presence.
However, history has taught us that it's significantly more difficult to unlearn familiar old -- and often dysfunctional -- ways of doing business than it is to learn the new ways of a commercial meritocracy.
That's one reason why the old-style industrial economy incumbents prefer to inhibit true free-market progress, rather than disrupt the restrictive status-quo within a protected-market. Embracing change requires courage.
Today, more investors and traders are able to make better decisions with up-to-date Technology, Media and Telecoms sector investment banking market data, trend research, financial analysis and guidance.
Technology, Media and Telecom Trends
Mergermarket, an Acuris company, has released its global mergers and acquisitions (M&A) roundup report of the Technology, Media and Telecom (TMT) sector for the whole year. In 2017, global deal-making in the TMT sector saw 3,389 deals worth a combined $498.2 billion. Although total deal value fell 26.3 percent compared to the $676.3 billion tallied in 2016, a new Mergermarket record by deal count was set, increasing by 233 transactions over 2016 (3,156 deals) to reach an all-time high.
Technology Sector Market Development
The latest market trends highlight the increasing influence of technology in just about everything. In fact, senior executives in various industries have been under pressure to incorporate digital transformation projects, in order to survive and prosper in the evolving global marketplace.
This has already forced company consolidations in long-standing industries such as Consumer; Pharma, Medical & Biotech; and of course Media. Half of all deal activity in TMT was driven by M&A in the Computer Software sub-sector alone, which accounted for 1,739 transactions (worth $128.8 billion) – 2.8 times that of eCommerce, which saw the second-highest deal count with 629 transactions (worth $85.1 billion).
Software was one of the few sectors where deal count actually rose in 2017. By deal value, software was responsible for 25.7 percent of total TMT deal value. But there were no software deals in 2017 anywhere in the globe that reached mega-deal (>$10 billion) status.
Private equity activity within the software sector also set a new record. While disclosed deal values for software buyouts ended with an aggregate $38.8 billion -- a 16.4 percent decrease from 2016 -- 2017 was still the third-highest value on record, with deal count hitting a peak of 438 transactions. That's 123 more than in 2016, which had previously held the record.
Global Media Sector Highlights
Media M&A had already been a volatile sector as a whole -- including entertainment, advertising, publishing, and broadcast -- struggled over the past few years to deal with the massive onslaught of changes brought on by technology advances. Moreover, the sector now finds itself grappling with the effects of several industry governance reform movements.
Global figures for the sector recorded $131.2 billion, a decrease of 28.9 percent compared to the $184.4 billion in 2016, though deal count was up by eight transactions to 568 over the same period. The U.S. market accounted for the bulk of the share of global media deal-making, comprising 78.9 percent of total deal value within the sector, and just under 30 percent of total deal count.
At the same time, this was 22.4 percent below total value in the U.S. in 2016 ($133.3 billion) and 17 fewer deals. In fact, the media sector deal value fell across the globe, by 52.5 percent in Europe to $13.6 billion in 2017, by 26 percent in Asia-Pacific (APAC) to $13.4 billion, and by 85.3 percent in the rest of the world to $600 million.
By deal count, however, activity rose in Europe and APAC, by 22 transactions over 2016 to 228 total in Europe and by six to 135 total in APAC.
TMT Market Outlook
According to the Mergermarket assessment, the structural changes taking place across industries that were influenced by technology sector advances are likely to continue shaping the global commercial landscape for deal-making well into 2018 and beyond.
While deal values may continue to fall, deal count in sectors, such as technology, are set to rise further. The sector will likely add more pressure to other traditional sectors to consolidate and battle over high-value targets, despite political and regulatory uncertainty.
Tax reform in the U.S. market, which resulted in a sizable cut to the corporate rate, is also widely anticipated to spur more M&A transactions as companies look to invest more on potential new deals.
However, with interest rate hikes projected for 2018, this could also restrain deal values, driving them downward. Meanwhile, the overall TMT deal count momentum is unlikely to be affected, as it continues on the path of ongoing growth.
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