TMT – 2023 review and 2024 predictions

21 February 2024

2023 TMT M&A Review

2023 was a tough year for deal making, with sources quoting a 75% reduction in activity compared to previous years. While we saw some evidence of those headwinds in the TMT sector, our clients had a much more positive experience in 2023 and we completed 50 deals (in line with last year) with a value of £1.8bn (25% down) in the year.

The factors that make TMT businesses attractive to investors have not changed, but market uncertainty, the availability and cost of debt, and trading challenges (including lengthening sales cycles and the ability to pass cost increases on to customers) mean that valuations have largely returned to pre-covid levels. However, the best assets, with growth, high levels of recurring revenue, and high margins, still command premium prices.

Investors are understandably cautious about paying high prices in this environment and so it is no surprise that we’re seeing more earnouts, and that the more aggressive, forward looking, adjusted EBITDA measures are being replaced by more reasonable and historical metrics.

Looking at some specific subsectors:

  • Infrastructure is attractive given the long-term demand profile, but the ‘build it and they will come’ days are very much over, with, for example, a greater focus on homes connected (rather than just homes passed) in fibre-to-the-home and a growing focus on Edge data centres.
  • IT consulting and professional services is challenging as customers postpone non-mission critical transformation programmes in favour of smaller projects with more immediate payback, but quality businesses are still in demand.
  • IT managed service and software remains generally attractive and we’ve seen an increase in corporate buyers from both sides of the Atlantic (and further afield), a rational response to risk of platform deals and a sign that the US has laid to rest its concerns about Brexit.
  • Media and marketing services were led by a continued interest in digital solutions and tech services.

Our takeaway is that, as ever, preparation is key to maintaining confidence and momentum to achieve a successful transaction. Vendor financial and commercial due diligence, a great financial model, and advisers that know the sector and potential buyer pool are critical. 

2024 TMT M&A Predictions

Stepping into the unfolding landscape of 2024, TMT M&A is on the brink of yet more exciting and challenging transformations. A myriad of factors, from availability of capital to evolving AI technologies, are poised to shape the financial strategies of technology companies. We expect 2024 to be shaped by the dynamic interplay of market forces, technological advancements, and geopolitical factors.

Plenty of PE Dry Powder Driving Deal Flow: The abundance of private equity (PE) dry powder is expected to bolster deal flow in 2024. Despite current trading challenges, there is optimism that conditions will improve. As in recent years, we expect this influx of private capital to be a driving force behind strategic investments and M&A in the technology sector.

UK Election Dynamics Accelerating Deals: The March 2024 Budget is expected to be the last chance for the Government to announce significant changes to tax policy before the general election, reports suggest that further tax cuts may be likely as the Conservatives try to close the deficit in the polls. However, the prospect of a general election in itself could serve as a catalyst for accelerated deal-making, particularly if concerns reemerge about Capital Gains Tax rises in a new Government or similar considerations come to the forefront.

AI's Unpredictable Trajectory: While artificial intelligence (AI) remains in high demand and surrounded by plenty of hype, its rapid evolution poses a challenge in formulating a reliable long-term plan. Companies are expected to grapple with the evolving landscape of AI technologies, adapting their financial and operational strategies to stay at the forefront of this transformative wave.

Data as the "Picks and Shovels" of AI: In 2024, data will be the indispensable foundation for AI applications. Cleansing and structuring data effectively will be critical as companies seek to harness AI technologies like ChatGPT for various applications.

Tech Cost Savings Plateau and Opportunities in 2024: The potential plateauing of major technology companies' cost-saving measures in 2023 opens up opportunities in 2024. As industry giants explore new avenues for efficiency, smaller players may find strategic openings for growth and market differentiation.

Buy and Build Strategies for Larger Corporates: Larger corporations in the sector are expected to adopt buy-and-build strategies in the absence of viable organic growth opportunities. While current interest rates make this strategy more expensive, this trend underscores the importance of strategic acquisitions in sustaining and expanding market presence.

Focus on Integration and Synergies: Companies that have already been through a buy-and-build phase are likely to shift their focus towards optimising internal systems. Integration efforts will be prioritized to realize cost synergies and enhance cross-sell opportunities, ultimately driving earnings growth.

Investments in Power Apps and Consultancies: Forward-looking companies are set to invest in power apps and consultancies that can accelerate the adoption of transformative technologies. This strategic approach positions businesses to stay agile in the face of technological evolution.

Emergence of International Buyers: The TMT corporate finance landscape is expected to witness the emergence of international buyers. We expect cross-border transactions and collaborations to become a prominent feature as companies seek to expand their global footprint.

Contemplation of US Listings: Some companies may contemplate US listings over UK listings, reflecting a strategic shift in response to market dynamics and investor preferences.

Tech Driving ESG Performance: Technology's role in driving Environmental, Social, and Governance (ESG) performance will continue to be a prominent theme in 2024. Strong ESG credentials will be increasingly important to investors.

Impact of Chip Shortages on OEMs: The chip shortages that impacted Original Equipment Manufacturers (OEMs) in 2022 will continue to be closely monitored. Any easing of shortages or continued impact on lead times could significantly influence corporate finance decisions.

"Office of CFO" Becoming a Theme: The "Office of CFO" is set to become a central theme in 2024, encompassing aspects of ESG, Governance, Risk, and Compliance (GRC), and Health & Safety (H&S). CFOs will play a pivotal role in aligning financial strategies with these multifaceted considerations.


In the dynamic landscape of TMT corporate finance, 2024 once again promises an exciting blend of challenges and opportunities. Adapting to the evolving technological, political, and market trends will be paramount for companies seeking not only survival but sustainable growth in highly competitive environments. As financial strategies evolve, the ability to navigate change with foresight and agility will be the hallmark of success in the years to come.

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