Roughly 3,021 mergers involving technology, media and telecom (TMT) companies occurred in 2016 -- a big number, but down 5.7 percent from a record 3,203 deals in 2015, according to Mergermarket's Global M&A report for the year.
Among the additional report highlights according to Mergermarket:
- The technology, media and telecom (TMT) mergers represented $698.2 billion worth of deals in 2016, down 4.5 percent from $730.8 billion in 2015.
- The TMT sector represented 21.4% of global M&A activity, up from 18.5% in 2015 and its second highest share tracked by Mergermarket since 2001.
- Deal activity accelerated towards the end of 2016, with Q4 deals (683 transactions worth a combined $295 billion) marking the highest Q4 value on record
- U.S. M&A activity ramped up in the run up to November’s presidential election, with dealmakers looking to complete business before a winner was announced. AT&T’s $ 105 billion takeover of Time Warner and CenturyLink's $34.5 billion acquisition of Level 3 were both announced in the month prior to the election.
Channel Mergers: VARs, MSPs, CSPs
Meanwhile, ChannelE2E tracked roughly 125 deals that involved VARs, MSPs and CSPs during 2016. Pinpointing the valuation of each deal can be tricky. But generally speaking, MSPs have been fetching valuations of between 5- and 7-times their annual EBITDA. Some MSPs have been sold for as much as 11 times their annual EBITDA, but such deals typically involve MSPs that own their own intellectual property. Generally speaking, VARs have been attracting lower valuations. See the ChannelE2E FAQ for more valuation details.
Based purely on demographics, it's a safe bet that IT service provider M&A activity will continue to accelerate through at least 2022. Why? Because business owners want to sell their companies before they age out of the market.
We'll share more details about the Top 100 VAR, MSP and CSP acquisitions of 2016 during our January 2017 webcast.
Complete M&A Coverage: Track all VAR, MSP and CSP mergers and acquisitions by visiting the ChannelE2E Milestones section daily.