Global M&A trends in technology, media and telecommunications: 2024 mid-year outlook – PwC
More
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
Move fast, think slow: How financial services can strike a balance with GenAI
Take on Tomorrow @ the World Economic Forum in Davos: Energy demand
PwC’s Global Investor Survey 2023
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
Climate risk, resilience and adaptation
Business transformation
Sustainability assurance
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
The Leadership Agenda
Global Workforce Hopes and Fears Survey 2024
The s+b digital issue: Corporate “power changers”
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
The New Equation
PwC’s Global Annual Review
Committing to Net Zero
Menu
Menu
Menu
Featured
The New Equation
PwC’s Global Annual Review
The Solvers Challenge
Loading Results
No Match Found
2024 Mid-Year Outlook
Strategy&, Global Technology & Telecoms Deals Leader, Partner, PwC United Kingdom
Global Entertainment & Media Deals Leader, Partner, PwC United States
Halfway through 2024, there are reasons for continued optimism about dealmaking in the technology, media and telecommunications (TMT) sector. The positive indicators we identified in our 2024 M&A Outlook—advances in generative AI and other new technologies, increased certainty around interest rates, record capital to invest and pent-up demand for dealmaking—still hold true. In the first six months of 2024, there have been some early signs that IPOs and technology megadeals are making a return. Higher interest rates, inflationary pressure, geopolitical factors and uncertainty around election results later this year may restrain some dealmaking activity, but we expect M&A to pick up again once conditions start to improve.
of TMT CEOs believe technological change will drive changes in the way their companies create, deliver or capture value in the next three years
Software continues to be the largest driver of M&A within TMT. Although deal volumes remain below historical levels, the deal values announced in the software sector during the first half of 2024 are on track to surpass last year. In the first half of 2024, Synopsys’s $32.5bn proposed acquisition of Ansys was the second-largest deal announced globally—across all industry sectors. In total, there were six announced software megadeals (deals with a value of more than $5bn) in the first half of 2024, compared to four in all of 2023.
Note: Top deals announced through 31 May 2024
Source: LSEG and PwC analysis
Software’s predictable recurring revenues and cash flows continue to appeal to both strategic buyers and private equity (PE) in the current lower-growth environment. While PE’s share of total software deals has decreased by four percentage points—from 63% in the second half of 2023 to 59% in the first half of 2024—it remains in line with the 2019-2023 average. However, PE’s share of total software deal value has decreased by 34 percentage points, from 83% in the second half of 2023 to 59% in the first half of 2024, well below the past five-year average.
As cyber products are increasingly delivered as software-as-a-service (SaaS) offerings rather than on premise or IT services, cybersecurity may also help push software deal dominance. As regulators mandate stronger cybersecurity reporting and there is increasing awareness of cyber threats, this will be an interesting software deal space to watch. Cisco’s $28bn acquisition of Splunk (the biggest software deal of 2023), Thoma Bravo’s $5.3bn proposed acquisition of cybersecurity AI company Darktrace, CyberArk’s $1.5bn proposed acquisition of machine identity specialist Venafi, and aircraft manufacturer Airbus’s acquisition of cybersecurity and IT solutions provider INFODAS all illustrate the continued interest in investments in this subsector. Furthermore, Palo Alto Networks recently announced its acquisition of IBM’s SaaS offering, QRadar, which may be a harbinger of more consolidation in the space as providers attempt to offer end-to-end security operations platforms.
“While not driving M&A just yet, artificial intelligence has attracted very significant venture and corporate investment. The combined planned capital expenditures of Google, Meta, Microsoft and Amazon in 2024 are more than $200bn—that’s equivalent to almost the entire value of M&A in the tech sector so far this year.”
We expect the following areas to be M&A hot spots in the second half of 2024:
As noted above, software deal value has increased compared to 2023 levels as corporates resume dealmaking following a period of internal focus.
Telecom companies continue to make transformational changes as they prepare for the future. PwC’s 27th Annual Global CEO Survey found that 52% of telecom CEOs say that their business models will not be economically viable in ten years if their companies continue on their current paths. Looking across the telecoms sector, we see companies and investors recognising that value can be unlocked by transferring components of the integrated telco business model into a more focused, or ‘puretone’, business model. This shift toward business model reinvention is already being seen in transactions such as the Sprint and T-Mobile merger, BT Group’s spin-off of BT Sports into a joint venture with Warner Bros. Discovery and the announced sale of American Tower’s India operations. These shifts are illustrated by the delayering and consolidation of assets that has been the trend in the industry over the past few years.
According to PwC’s Global Entertainment and Media Outlook 2023-2027, global advertising revenue is projected to increase from $763.7bn to $952.6bn, representing a compound annual growth rate of 4.5%. This trajectory puts advertising on a path towards becoming the first of three major entertainment and media categories to reach $1tn in annual revenue. It has become a core revenue stream for entertainment and media businesses that depend on targeted advertising to generate incremental ROI, especially as streaming services mature. And capital is already being deployed. For example, Amazon is expanding its streaming of National Football League games to include some key playoff games. This expansion of the market opens opportunities for the industry to further grow revenue channels as tech companies such as Apple and Netflix leverage their robust data collections to develop targeted advertising, demand-side platforms (DSPs) and supply- side platforms (SSPs) to reach consumer wallets. We expect deals related to advertising and its components, such as ad tech vendors and digital marketing agencies, to be a focus for M&A as entertainment companies compete for a greater share of consumer spending.
“The continued pressure for consumers’ time and money is driving the broader entertainment and media ecosystem to focus on value. We expect joint ventures, partnerships and bundling to continue to drive customer satisfaction and value propositions to support pricing, minimise churn and drive new customers to platforms.”
Click the tabs to view the chart and commentary for each region.
Bar chart showing M&A volumes for the technology, media and telecommunications sectors. Deal volumes in TMT increased by 5% between 2022 and 2023 although deal values declined by 55% due to a lower number of megadeals.
Deal volumes decreased by 20% during the first half of 2024 compared to the first half of 2023 and deal values decreased by 8% over the same period. The sector trends for deal values varied, with media and entertainment and telecoms showing growth in deal values despite the volume declines. Despite some notable technology megadeals being announced during the first half of 2024, the drop in deal volumes was too great to recover from and deal values in the technology sector decreased by 15%.
The technology sector remained the largest sector accounting for 83% of deal volumes and 72% of deal values in the first half of 2024.
Within the technology sector, software accounted for 69% of deal volumes and 70% of deal values. During the first half of 2024, software deal volumes decreased by 23% from the first half of 2023, but deal values increased by 55% because of eight megadeals. The next largest subsector, IT services, accounted for 17% of deal volumes and 14% of deal values, seeing double-digit declines in both deal volumes and values during the first half of the year. The semiconductor sector also slowed, with deal volumes decreasing by 32% and deal values by 52%.
The global entertainment and media landscape continues to be reshaped by technology, creating innovative opportunities for strategic M&A as companies adapt to evolving consumer preferences, respond to regulatory pressures and focus on core business units.
During the first six months of 2024, we have seen indicators of the return of corporate megadeals in media and entertainment. In the second half of the year, we anticipate household names to continue to engage in large transactions as they look for ways to restructure their portfolios and respond to regulatory demands.
As we highlighted in our 2024 Outlook, we expect telcos to continue to follow their core strategies of delayering, in-country consolidation and cross-country portfolio optimisation.
To maintain relevance in a time of economic uncertainty, companies should prioritise resilience and speed to unlock value from transformational deals. Below are four areas of focus for dealmakers to consider.
Our commentary on M&A trends is based on data from industry-recognised sources and our own independent research. Specifically, deal volumes and values referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 May 2024 and as accessed on 3 June 2024. To facilitate meaningful comparisons with prior half-year periods, the LSEG deal volumes and values data for the first half of 2024 (denoted in the charts as H1’24*) covers the first five months of the year, extrapolated to represent a six-month period. This adjustment ensures consistency in the analysis and allows for trend analysis across the reported timeframes. It does not represent a PwC forecast. Certain adjustments to source data have been made to align with PwC’s industry mapping. All dollar amounts are in US dollars.
Barry Jaber is PwC’s global technology and telecommunications deals leader and a leading practitioner with Strategy&, PwC’s strategy consulting business. He is a partner with PwC UK. Bart Spiegel is PwC’s global entertainment and media deals leader. He is a partner with PwC US.
The authors would like to thank the following colleagues for their contributions: Madison Boezinger, Brian Burns, Florian Groene, Justin Ingram, Victor Myers, David Samuel, Neomi Sanghrajka and Alex Schmitt.
Read our 2024 Outlook
Barry Jaber
Strategy&, Global Technology & Telecoms Deals Leader, Partner, PwC United Kingdom
Bart Spiegel
Global Entertainment & Media Deals Leader, Partner, PwC US
Alvin Bao
Partner, PwC China
Alan Jones
Partner, PwC US
Brenda Yip
Partner, PwC China
Brett Duell
Partner, PwC Australia
Carol Wu
Partner, PwC China
Gerald Schustereder
Partner, PwC Germany
Steven Perrin
Partner, PwC France
Mike Eledjam
Partner, PwC France
Shivalika Handa
Partner, PwC Canada
Sachin Jayapalan
Partner, PwC Canada
Sundar Ramamurthy
Principal, PwC US
Vincent Lüscher
Director, PwC Switzerland
Lasse Stünitz
Director, PwC Switzerland
David Willems
Partner, PwC France
Édouard Bitton
Strategy&, Partner, PwC France
Daniel Martínez
Partner, PwC Spain
Jonathan Cooper
Partner, PwC United Kingdom
Jayant Kumaar
Partner, PwC India
© 2017 – 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
Move fast, think slow: How financial services can strike a balance with GenAI
Take on Tomorrow @ the World Economic Forum in Davos: Energy demand
PwC’s Global Investor Survey 2023
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
Climate risk, resilience and adaptation
Business transformation
Sustainability assurance
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
The Leadership Agenda
Global Workforce Hopes and Fears Survey 2024
The s+b digital issue: Corporate “power changers”
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Menu
Featured
The New Equation
PwC’s Global Annual Review
Committing to Net Zero
Menu
Menu
Menu
Featured
The New Equation
PwC’s Global Annual Review
The Solvers Challenge
Loading Results
No Match Found
2024 Mid-Year Outlook
Strategy&, Global Technology & Telecoms Deals Leader, Partner, PwC United Kingdom
Global Entertainment & Media Deals Leader, Partner, PwC United States
Halfway through 2024, there are reasons for continued optimism about dealmaking in the technology, media and telecommunications (TMT) sector. The positive indicators we identified in our 2024 M&A Outlook—advances in generative AI and other new technologies, increased certainty around interest rates, record capital to invest and pent-up demand for dealmaking—still hold true. In the first six months of 2024, there have been some early signs that IPOs and technology megadeals are making a return. Higher interest rates, inflationary pressure, geopolitical factors and uncertainty around election results later this year may restrain some dealmaking activity, but we expect M&A to pick up again once conditions start to improve.
of TMT CEOs believe technological change will drive changes in the way their companies create, deliver or capture value in the next three years
Software continues to be the largest driver of M&A within TMT. Although deal volumes remain below historical levels, the deal values announced in the software sector during the first half of 2024 are on track to surpass last year. In the first half of 2024, Synopsys’s $32.5bn proposed acquisition of Ansys was the second-largest deal announced globally—across all industry sectors. In total, there were six announced software megadeals (deals with a value of more than $5bn) in the first half of 2024, compared to four in all of 2023.
Note: Top deals announced through 31 May 2024
Source: LSEG and PwC analysis
Software’s predictable recurring revenues and cash flows continue to appeal to both strategic buyers and private equity (PE) in the current lower-growth environment. While PE’s share of total software deals has decreased by four percentage points—from 63% in the second half of 2023 to 59% in the first half of 2024—it remains in line with the 2019-2023 average. However, PE’s share of total software deal value has decreased by 34 percentage points, from 83% in the second half of 2023 to 59% in the first half of 2024, well below the past five-year average.
As cyber products are increasingly delivered as software-as-a-service (SaaS) offerings rather than on premise or IT services, cybersecurity may also help push software deal dominance. As regulators mandate stronger cybersecurity reporting and there is increasing awareness of cyber threats, this will be an interesting software deal space to watch. Cisco’s $28bn acquisition of Splunk (the biggest software deal of 2023), Thoma Bravo’s $5.3bn proposed acquisition of cybersecurity AI company Darktrace, CyberArk’s $1.5bn proposed acquisition of machine identity specialist Venafi, and aircraft manufacturer Airbus’s acquisition of cybersecurity and IT solutions provider INFODAS all illustrate the continued interest in investments in this subsector. Furthermore, Palo Alto Networks recently announced its acquisition of IBM’s SaaS offering, QRadar, which may be a harbinger of more consolidation in the space as providers attempt to offer end-to-end security operations platforms.
“While not driving M&A just yet, artificial intelligence has attracted very significant venture and corporate investment. The combined planned capital expenditures of Google, Meta, Microsoft and Amazon in 2024 are more than $200bn—that’s equivalent to almost the entire value of M&A in the tech sector so far this year.”
We expect the following areas to be M&A hot spots in the second half of 2024:
As noted above, software deal value has increased compared to 2023 levels as corporates resume dealmaking following a period of internal focus.
Telecom companies continue to make transformational changes as they prepare for the future. PwC’s 27th Annual Global CEO Survey found that 52% of telecom CEOs say that their business models will not be economically viable in ten years if their companies continue on their current paths. Looking across the telecoms sector, we see companies and investors recognising that value can be unlocked by transferring components of the integrated telco business model into a more focused, or ‘puretone’, business model. This shift toward business model reinvention is already being seen in transactions such as the Sprint and T-Mobile merger, BT Group’s spin-off of BT Sports into a joint venture with Warner Bros. Discovery and the announced sale of American Tower’s India operations. These shifts are illustrated by the delayering and consolidation of assets that has been the trend in the industry over the past few years.
According to PwC’s Global Entertainment and Media Outlook 2023-2027, global advertising revenue is projected to increase from $763.7bn to $952.6bn, representing a compound annual growth rate of 4.5%. This trajectory puts advertising on a path towards becoming the first of three major entertainment and media categories to reach $1tn in annual revenue. It has become a core revenue stream for entertainment and media businesses that depend on targeted advertising to generate incremental ROI, especially as streaming services mature. And capital is already being deployed. For example, Amazon is expanding its streaming of National Football League games to include some key playoff games. This expansion of the market opens opportunities for the industry to further grow revenue channels as tech companies such as Apple and Netflix leverage their robust data collections to develop targeted advertising, demand-side platforms (DSPs) and supply- side platforms (SSPs) to reach consumer wallets. We expect deals related to advertising and its components, such as ad tech vendors and digital marketing agencies, to be a focus for M&A as entertainment companies compete for a greater share of consumer spending.
“The continued pressure for consumers’ time and money is driving the broader entertainment and media ecosystem to focus on value. We expect joint ventures, partnerships and bundling to continue to drive customer satisfaction and value propositions to support pricing, minimise churn and drive new customers to platforms.”
Click the tabs to view the chart and commentary for each region.
Bar chart showing M&A volumes for the technology, media and telecommunications sectors. Deal volumes in TMT increased by 5% between 2022 and 2023 although deal values declined by 55% due to a lower number of megadeals.
Deal volumes decreased by 20% during the first half of 2024 compared to the first half of 2023 and deal values decreased by 8% over the same period. The sector trends for deal values varied, with media and entertainment and telecoms showing growth in deal values despite the volume declines. Despite some notable technology megadeals being announced during the first half of 2024, the drop in deal volumes was too great to recover from and deal values in the technology sector decreased by 15%.
The technology sector remained the largest sector accounting for 83% of deal volumes and 72% of deal values in the first half of 2024.
Within the technology sector, software accounted for 69% of deal volumes and 70% of deal values. During the first half of 2024, software deal volumes decreased by 23% from the first half of 2023, but deal values increased by 55% because of eight megadeals. The next largest subsector, IT services, accounted for 17% of deal volumes and 14% of deal values, seeing double-digit declines in both deal volumes and values during the first half of the year. The semiconductor sector also slowed, with deal volumes decreasing by 32% and deal values by 52%.
The global entertainment and media landscape continues to be reshaped by technology, creating innovative opportunities for strategic M&A as companies adapt to evolving consumer preferences, respond to regulatory pressures and focus on core business units.
During the first six months of 2024, we have seen indicators of the return of corporate megadeals in media and entertainment. In the second half of the year, we anticipate household names to continue to engage in large transactions as they look for ways to restructure their portfolios and respond to regulatory demands.
As we highlighted in our 2024 Outlook, we expect telcos to continue to follow their core strategies of delayering, in-country consolidation and cross-country portfolio optimisation.
To maintain relevance in a time of economic uncertainty, companies should prioritise resilience and speed to unlock value from transformational deals. Below are four areas of focus for dealmakers to consider.
Our commentary on M&A trends is based on data from industry-recognised sources and our own independent research. Specifically, deal volumes and values referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 May 2024 and as accessed on 3 June 2024. To facilitate meaningful comparisons with prior half-year periods, the LSEG deal volumes and values data for the first half of 2024 (denoted in the charts as H1’24*) covers the first five months of the year, extrapolated to represent a six-month period. This adjustment ensures consistency in the analysis and allows for trend analysis across the reported timeframes. It does not represent a PwC forecast. Certain adjustments to source data have been made to align with PwC’s industry mapping. All dollar amounts are in US dollars.
Barry Jaber is PwC’s global technology and telecommunications deals leader and a leading practitioner with Strategy&, PwC’s strategy consulting business. He is a partner with PwC UK. Bart Spiegel is PwC’s global entertainment and media deals leader. He is a partner with PwC US.
The authors would like to thank the following colleagues for their contributions: Madison Boezinger, Brian Burns, Florian Groene, Justin Ingram, Victor Myers, David Samuel, Neomi Sanghrajka and Alex Schmitt.
Read our 2024 Outlook
Barry Jaber
Strategy&, Global Technology & Telecoms Deals Leader, Partner, PwC United Kingdom
Bart Spiegel
Global Entertainment & Media Deals Leader, Partner, PwC US
Alvin Bao
Partner, PwC China
Alan Jones
Partner, PwC US
Brenda Yip
Partner, PwC China
Brett Duell
Partner, PwC Australia
Carol Wu
Partner, PwC China
Gerald Schustereder
Partner, PwC Germany
Steven Perrin
Partner, PwC France
Mike Eledjam
Partner, PwC France
Shivalika Handa
Partner, PwC Canada
Sachin Jayapalan
Partner, PwC Canada
Sundar Ramamurthy
Principal, PwC US
Vincent Lüscher
Director, PwC Switzerland
Lasse Stünitz
Director, PwC Switzerland
David Willems
Partner, PwC France
Édouard Bitton
Strategy&, Partner, PwC France
Daniel Martínez
Partner, PwC Spain
Jonathan Cooper
Partner, PwC United Kingdom
Jayant Kumaar
Partner, PwC India
© 2017 – 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
