The long wait for the recovery: Q1'24 M&A trends in TMT

It was more of the same for mergers-and-acquisitions (M&A) in the technology, media, and telecom (TMT) sector in Q1’24. TMT deal making was stubbornly stuck in low gear, with many deal makers remaining cautious. In this environment, we believe they might want to take a closer look at the potential for revenue growth, alongside cost-cutting measures, to ensure that a deal pays off.

In a time of macroeconomic uncertainty, it is crucial to ensure that front-office and sales prospects are robust enough to justify the multiples being paid. We take a deep dive into the critical need for a growth-focused integration effort and outline key steps in formulating a plan, including assessing the current go-to-market model and identifying levers for improvement. 

In Q1’24, deal trends were flat both in volume and value from the previous quarter. Total deal count fell 2.4 percent while deal value retreated 2.9 percent. A big reason why the data didn’t look worse was thanks to a single $35 billion transaction in January: Synopsis, a provider of semiconductor testing tools, announced that it would acquire Ansys, an engineering software maker. This also made technology by far the most robust subsector, with an 80.8 percent quarter-over-quarter surge in deal value even though deal count slid 1.4 percent. Media and telecom M&A paled in comparison as deal value for both tumbled.

Notable trends in the TMT deal market in Q1’24 included:

• Weak PE deal making: Private equity (PE) deal value dropped 69.6 percent from Q4’23 while deal count decreased 17.6 percent.
• Continuing macroeconomic uncertainty: The persistent strength of inflation and the economy has raised doubts about how soon and how much interest rates will fall, deterring deal makers.
• Rising political risk: The upcoming U.S. presidential election and the future direction of the next administration’s antitrust policy may be influencing some deal makers to delay M&A.

Yet both corporates and PE firms are sitting on plenty of cash. If the current uncertainty starts to lift as the year progresses, we believe the momentum for an M&A recovery could quickly gather steam.

For a comprehensive review of the TMT deal trends in Q1’24 and what to expect in the coming months, download your copy of our report.