New analysis by PwC looking at recent merger and acquisition activity in Technology, Media and Telecoms (TMT) shows that technology is front and centre of companies’ minds when looking at deal activity and value.
The report ‘Creating Value: Beyond the Deal in TMT’ is part of an extensive review of corporate M&A globally, highlighting perspectives from both the buyer and seller in a transaction, assessing public market data and primary sources from 600 interview participants. Among the key findings, 40 per cent of TMT companies said that technology acquisition was the main strategic driver behind their latest deals, the highest figure compared to other sectors surveyed including financial services, retail, healthcare and energy. A quarter of TMT companies say disruption of the industry has driven their latest acquisition, the second highest amongst the other sectors surveyed and only behind financial services. TMT senior executives were also asked about the assets they have sold over the past three years and company owners revealed that almost a third (30 per cent) disposed of assets that were struggling to remain competitive, another high across all sectors. Twenty percent said that ongoing geopolitical and macroeconomic issues caused them to sell assets. Nick George, partner in PwC’s TMT practice, said “The TMT sector has been through a fast-paced transformation over the past decade which has put massive pressure on deal-makers, from origination to execution and integration. Disruption and competition are the main drivers of acquisitions and this means businesses in the sector need to be prepared to take advantage of opportunistic deals. Making such decisions at speed is tough, but with competition for the best assets in TMT so intense, businesses need to do the groundwork that allows them to acquire at speed.
As part of the study, PwC asked companies how they will look to increase value in their future acquisitions and divestments. In TMT, more than a quarter (28 per cent) said more effective programme management and starting integration earlier were the biggest lessons to take away for future acquisitions. For divestments the top three areas cited by respondents where value could be added were improved divestment resources (41 per cent), which came highest for TMT companies and third overall in comparison to industrial products and healthcare. The second highest lesson learnt was more effective programme management (39 per cent) and thirdly better communication with stakeholders (37 per cent). Nick George, explained “Companies in the sector acknowledge they need to do a better job of managing their deal programmes and start planning future deals earlier.”