What’s ringing up deal values in TMT?
April 29, 2016
The Technology, Media and Telecommunications (TMT) mergers and acquisitions (M&A) market continues to play a big part in the overall UK M&A market. Despite a slight decline in the total volume and value of deals over the past 12 months, we’ve seen sustained strong levels of deals activity with robust deal volumes over the past 24 months.
What is particularly interesting is that, over the past 12 months, average deal values have continued to rise, with notable recent big ticket deals including BT Group’s acquisition of EE, Qualcom Global Trading’s acquisition of CSR Plc, Arris Group’s acquisition of Pace Plc and Equinix’s acquisition of Telecity Group Plc – all well over £1bn.
Rolling four quarters comparison
(Four quarters to the end of Q1 for each of 2014, 2015 & 2016)
| Year to end Q1 2014 | Year to end Q1 2015 | Year to end Q1 2016 | |
| Deal volume | 55 | 90 | 78 |
| Total deal value | £10,318m | £42,001m | £40,833m |
| Average deal value | £188m | £467m | £523m |
Source: Thomson Reuters, Prequin & PwC analysis as at 31 March 2016
Recent quarter on quarter comparison
| Q4 2015 | Q1 2016 | Variance | |
| Deal volume | 17 | 16 | -5.9% |
| Total deal value | £4,645m | £20,920m | 350.4% |
| Average deal value | £273m | £1,308m | 379.1% |
Source: Thomson Reuters, Prequin & PwC analysis as at 31 March 2016
Other key TMT subsectors contributing to deal activity include:
- Digital and cyber security where we’ve seen NCC Group Plc acquire Fox IT Group and Accumili Plc, and specialist software (often vertical-oriented) businesses securing investment, such as Bowmark Capital investing in Nexus Vehicle Management Ltd.
- Infrastructure investments such as Ethos Private Equity’s acquisition of Eaton Towers Ltd, and Infracapital Partners investing in Gigaclear Plc.
- Established media has also returned to M&A with Trinity Mirror Plc acquiring Local World Holdings Ltd, and Pearson Plc selling the Financial Times Group Ltd to Nikkei.
- Education content and services have further fuelled the TMT sector with Kaplan International Colleges UK Ltd’s acquisition of Mander Portman Woodward Ltd.
Future gazing
So what does the immediate future hold for the TMT deals market? The EU referendum is creating greater uncertainty in the M&A environment – a particular feature for TMT being the extent to which the sector has attracted international investment, with notable sources of capital from the US and Far East as well as Continental Europe.
What have been the key drivers for your M&A activity? How do you see 2016 playing out? Share your thoughts below or schedule a meeting to discuss your situation in confidence.
