Anecdotal evidence throughout 2015 suggested a hot market for technology, media and telecom (TMT) mergers and acquisitions. Now, the data proves it: Global TMT activity reached an all-time high — including 3,021 M&A transactions valued at $768.3 billion, a big 46.6 percent jump from $524.1 billion and 2,988 deals in 2014, according to Mergermarket.
But can such a hot M&A market remain hot in 2016? Before you answer consider these additional stats from 2015:
M&A activity targeting the Technology sub-sector (2,225 deals, US$ 421.6 billion), drove overall TMT value during 2015, increasing 88% compared to 2014 to reach both its highest deal value and count on Mergermarket record. The US was the most targeted country for Technology M&A activity, attracting US$ 249.4 billion worth of deals, up 92.1% compared to 2014 (US$ 129.8 billion), the researcher said.
The Telecommunications (196 deals, US$ 259.3 billion) sub-sector achieved its highest annual value on record, a 5.8% increase by value compared to 2014 (US$ 223.9 billion, 194 deals), and 2.1% above 2013’s previous record (US$ 254 billion, 239 deals). Similarly, Media (600 deals, US$ 87.4 billion) reached its highest annual value since 2007, highlighting a spread of interest in deals throughout the TMT sector the researcher said.
So, what does 2016 have in store?
Educated Guesses: 2016 Technology and Channel M&A
The stats above don’t specifically cover channel-oriented companies like VARs and MSPs. But generally speaking, ChannelE2E expects deal activity involving those types of companies to increase now through 2022. Why? Our answer is based on demographics and the aging population of small and midsize business owners in the channel.
In the tech space, watch for Dell to finalize its buyout of EMC. I suspect enterprise buyouts will slow down a bit — simply because the market needs a chance to catch its breadth.
The story is incredibly different in the telecom space, where traditional companies are trying figure out whether to double down on cloud services or whether to exit. CenturyLink and Verizon, for instance, have been shopping around their data centers.
PS: Stay tuned. We’ll provide an update on MSP and VAR valuations. Service Leadership CEO Paul Dippell will share all the details during a podcast on Tuesday, January 19. Find it at that time here.