In a sharp reversal: Q4’22 M&A trends in technology, media, and telecom

After a blockbuster 2021, deal activity in the TMT sector pulled back significantly last year. Deal volume fell 22 percent to 6,601 from 8,460, while deal value declined 26 percent to $698 billion from $937.9 billion.

Technology deals dropped 23.5 percent by volume and 28 percent by value, media deals declined 17.9 percent by volume and 10.6 percent by value, and telecom deals decreased 19.2 percent by volume and 63.3 percent by value.

The main M&A trends that defined the TMT sector in 2022 are:

• Sentiment turned cautious: From mid-2022 with inflation at 40-year highs and the Federal Reserve aggressively raising interest rates, M&A in large-cap and public-market companies noticeably began to slow.
• More smaller deals: Primarily driven by vertical software and digital marketing segments, M&A activity in the mid-to-lower market remained relatively strong, with less of a pullback than the upper tier of the market.
• End of the SPAC boom: After roaring in 2021, mergers with special-purpose acquisition companies (SPACs) lost steam in 2022. A volatile equity market, lackluster post-merger performances, and increased regulatory scrutiny resulted in a 33 percent drop in deal volume and an 81 percent plunge in deal value.

As the new year begins amid recession fears, market volatility, and other uncertainties, we expect the slowdown in deal making to continue. But if macroeconomic conditions improve, activity should pick up. For high quality assets, we believe it can be a good time to explore M&A, especially with a dearth of quality assets coming to market.

Download our report for a comprehensive look at the TMT deal market in 2022 and KPMG deal professionals’ views on how 2023 may shape up.