M&A Trends: What’s new in the Technology, Media, and Telecommunications (TMT) Sector

February 11, 2022 | Blog

M&A Trends: What’s new in the Technology, Media, and Telecommunications (TMT) Sector

Welcome to the Datasite blog on TMT where we will provide regular updates on M&A’s most active industry.

What is TMT?  

The technology, media, and telecom (TMT) sector is an industry group that includes everything from technology companies like Microsoft to media organizations that range from your local radio station to Disney, and Telecommunications, aka your phone company.

But wait, there’s more. In today’s age almost everything can be a technology company. That’s why you’ll see common terms like fintech, healthtechfoodtechedtech, and even fashiontech!  Technology is eating the world – which can get confusing if you like your sectors nicely separated.

Investors have seen explosive growth and high returns by investing in the TMT sector, as innovation, research, and development transforms old industries in new and unexpected ways. Think Venmo.

In the wake of COVID-19, companies within the TMT sector have been key to economic recovery and rapid digitization as companies rushed to adapt to the new remote-working world. In a popular McKinsey Global Survey of executives, Covid has accelerated digital transformation across industries globally by years; their companies’ customer and supply-chain interactions and internal operations has accelerated by three to four years, and the share of digital products has accelerated by seven years.

TMT can be further broken down by category:


  • Electronics
  • Hardware
  • Software
  • Internet

Some examples of technology companies include Meta (formerly Facebook), Google, Amazon, Alibaba, Microsoft, Adobe, IBM, Dell, and HP.


  • Cable companies
  • TV
  • Movies
  • Music
  • Video Games
  • Magazines, newspapers, and other periodicals

Examples of media companies include: Disney, Netflix, Sony, ViacomCBS, Thomson Reuters, Fox, WarnerMedia, and Hearst.


  • Wireless service
  • Cable and internet signal providers
  • Radio stations

Examples of telecom companies include: AT&T, Verizon, T-Mobile, Comcast, and Vodafone.

About 20% of deal activity flows through our platform, so we have an aggregated view of what’s about to come down the pipeline. We’ve seen that TMT deal activity has picked up over 100% year over year. Media deals have also boomed, showing that many of us have spent a lot of time on streaming services during the pandemic, and this trend is likely to continue.

Private Equity’s lockdown love affair with TMT

Private equity firms have been all over the TMT boom. Datasite and Pitchbook recently released a report “ Private equity’s lockdown love affair” on why deal activity in the TMT sector has soared. Read below for the latest.

Software is where the hard bargains are being driven. PE dealmaking records are tumbling, with the pandemic actively fueling the fire rather than damping it down. As companies rushed to digitize and upgrade their tech stacks to meet the demands of remote working, PE firms moved in on a rich crop of targets. 

Such frenzied competition, coupled with the fast-changing software industry, has piled on the pressure for both PE fund managers and deal teams. Swift, efficient execution of deals is top of the agenda. But there’s much more to think about. Cybersecurity concerns at the portfolio management level remain a key focus, as do controls of documentation, processes and financial information. 

An already tough environment is spawning fresh challenges. Foremost is the fast pace of technical innovation. Then there is the growing antitrust scrutiny facing the tech giants, amid concerns over uncompetitive practices. All of these will require more intensive due diligence and risk management processes, with greater automation wherever possible. That in turn will demand significant investment. 

Furthermore, dealmakers and portfolio managers must ensure that bespoke value creation agreements for software companies are kept up to date. It’s also vital that processes can be executed as efficiently as possible. In the current competitive dealmaking climate, agility is perhaps the greatest asset of all.

Software is eating the (remote) world

Software in particular is commanding the attention of private equity. It’s set to be a record year for both deal numbers and deal value – over 1,100 transactions totaling $62.1bn by mid-August alone. In fact, COVID-19 has accelerated deal making in software. The past 18 months have seen a digital stampede, as businesses everywhere have scrambled to upgrade their tech for remote working. The result? PE firms with an eye for software companies have been spoiled for choice. 

Not that this means easy pickings. Competition is fierce. The median deal size sits at an all-time high of $50m; prices have risen across the whole market. 

What does this tell us – aside from it being competitive out there? Two things leap out. One is that PE firms have a growing interest in late-stage, venture-backed software businesses. The other is that add-ons are doing a roaring trade. In 2021 to date, add-ons have made up nearly 80% of all buyouts in the software space. Rather than just buy up platforms, PE fund managers are building them out with anywhere from six to 10 add-ons, according to anecdotal reports. 

In recent years, PE firms have been targeting bigger and juicier private software companies. This can require them to club together, and such ‘club deals’ are growing in popularity. By August 2021, nearly 400 had completed, at a combined value of $19.1bn. 

Factor in high transaction multiples, and such collaborations become ever more daunting. It’s not enough for PE teams to act swiftly to beat the competition. They must also take greater care. That means higher levels of due diligence, even as they strive to pick up the pace. How? The clear path is through investment in top-quality automation. PE deal teams need to streamline these essential processes, while delivering greater accuracy. Only then can they focus on the highest value transactions. 

The climb is steeper

Yes, there’s greater market appetite. Companies are still racing to upgrade their tech stacks. But incumbent technology providers are notoriously hard to dislodge, and hungry startups are circling the same prizes. No wonder that PE managers are thinking more about value creation strategies. And they’re doing it earlier in the transactional process. This is behind the surge of interest in add-ons, as managers use these to build critical mass in certain market segments. 

Meanwhile, all the usual challenges apply. It’s vital to have a clear understanding of every company’s target market. The same goes for their strategic roadmaps, and their product-market fit. Such insight demands multiple operating partners. And then there are the challenges peculiar to the software sector, such as cybersecurity and keeping pace with technical innovation. In short, portfolio managers have much to think about. 

A Niagara of liquidity

How are PE firms coping with these complexities? If current exit activity is any guide, pretty well. In the year to date, they’ve achieved a record $174.2bn in exit value across 217 exits. Much of this is thanks to red-hot equity markets over the past 18+ months. In that period, public listings of PE-backed software companies have exceeded $150bn. But acquisitions have also played a key role, reaching $59bn in 2021 to date. Liquidity has rarely flowed so strongly. 

Of course, a rising tide lifts all boats. But there’s more to this than outstanding market performance. Publicly traded corporations have revealed a sharp appetite for acquisitions, and PE portfolio companies are reaping the rewards.  

The exit environment for PE software companies is rosy. Firms seeking to take portfolio companies public via a reverse merger still have the option of a special purpose acquisition company (SPAC) – at least for the time being. Meanwhile, private investment in public equity (PIPEs) remains a viable alternative. 

Now it’s easier to see why PE buyouts of VC-backed portfolio companies took so long to reach current levels. Not only did the software market need to grow significantly, but it also took time to attract multiple, dedicated PE funds. Those funds wanted to see greater maturity in the areas of technical innovation and total addressable markets, in terms of both value proposition and scale. With that watershed reached at last, PE firms within the space have grown more active and refined their approaches. Now, with 184 completed deals worth a total $6.3bn in 2021 so far, it’s clear that this year will reach new high-water marks even after two straight years of intensive dealmaking.  

It is likely that PE firms will become even more involved in this space. They may even raise specific funds targeted at niche segments such as database management, as those mature into more fertile prospects. 

Looking forward 

Investment in software companies is still a developing art. There is huge scope for refining strategies to capitalize on this ever more complex market. Each opportunity comes with its corresponding challenge. For instance, talent sourcing: as software companies shift to hybrid work models, there are larger potential labor pools – but also the need to reevaluate organizational structures. Meanwhile the rise in digital service taxes has complex tax implications for mergers (as does hybrid working).  

Nevertheless, those opportunities are numerous. Many traditional industries are still behind where they need to be in terms of digitization. To give just one example, electronic healthcare records will have significant cybersecurity concerns. Here the challenge and the opportunity are effectively the same thing, and PE fund managers that can solve the one will reap the other. 

Tech founders often find themselves on a hamster wheel – constantly  raising money to keep growth going. It’s hard to keep growth going – let alone preparing for that exit.

TMT by the Numbers

According to Pitchbook data, in 2021, there were 2,177 companies and deals, and 359b in M&A deal value in the TMT sector.

The median TMT M&A deal size in 2021 was $67m. 

TMT investors who want a nice return on their money can get them by exiting via M&A or IPOs.

Why TMT has detonated

The M&A boom in the TMT sector has been sparked by an explosive mix: COVID-19, climate change, the consequent focus on ESG by PE investors, and the new technology to make more things possible. We have tracked the path of the TMT surge and detected several key themes.

The trajectory of a private equity boom

Theme 1: Investment in cybersecurity sets records

The pandemic’s effects have been seismic. Remote working has rocketed – and with it, cyberattacks. With corporations forced to spend much more on secure digital infrastructure, PE firms are following the money, piling investment into cybersecurity at record levels. Pitchbook data shows that cybersecurity startups raised $9.9 billion globally in the first six months of 2021, 96% of the total raised in 2020. Meanwhile the average valuation of the companies raising funds has more than doubled, to $475 million.

Nowhere is such protection more vital than in M&A. Deals depend on ironclad security, trust, privacy and compliance – the elements at the core of Datasite’s service. We have long anticipated and catered for these greater security challenges, which is why you can execute deals end-to-end without leaving the security and comfort of the project environment. Sourcing, marketing, preparation, due diligence, negotiation, closing, PMI and value capture all take place inside our stronghold.

Theme 2: Climate-tech investments become mainstream again 

Investing in climate technology is back in vogue. The first cleantech investment surge, in the early 2000s, was more of a fad, a bubble that soon burst. It also focused mainly on electricity, transport, and efficiency by software. But new technologies, coupled with a genuine sense of urgency driven by extreme weather events, gives the current boom much more credibility.

Global investors are now injecting billions into cleantech, with a primary focus on agriculture, food and mobility (as the largest sources of carbon output). The new wave of climate tech investment is also fueled by the global push for carbon-zero targets. Pitchbook data reveals that investors have closed as many climate-focused funds in 2021 to date, as in the last five years combined. 

Theme 3: ESG is seen as a lever of business opportunity 

Both global weather and public health crises have sounded warning alarms in the business world. Social pressures are now irresistibly moving ESG issues to the forefront. According to the Pitchbook 2020 Sustainable Investment Survey, 95% of LPs are either already evaluating ESG risk factors or will be increasing their focus on ESG risk factors in the coming year.

In real time, we are watching ESG transform from check-the-box compliance to a genuine source of value creation. Ultimately, more and more people want to work for employers that are sustainable, purpose-driven, diverse and inclusive. The money is following the talent, while regulatory developments and demand from LPs add up to make a critical mass. Business leaders and PE investors now have ESG firmly in their sights.

Theme 4: Digitization trends drive software M&A

The software market is a red-hot zone for TMT activity, with digitization trends fueling the M&A boom. TMT deal activity rebounded quickly after the initial impact of the pandemic, returning faster and stronger than in other sectors. Across industries, corporations had to digitize rapidly to adapt to the new remote world, and so software deals surged. Leaps in technology, and the demand for infrastructure to support remote working and entertainment streaming, coincided with a vast pile of dry powder. It made a volatile combination, and PE investors are adding fuel to the fire by pouring capital into software deals. 

TMT M&A – the Datasite view

So much for the broader picture – but what does TMT M&A look like when you drill behind the scenes? As the leading data room provider, Datasite can reveal unique insights into the due diligence processes.

We sifted the most popular search terms by dealmakers across our platform. This had 'COVID' and 'PPP' (Paycheck Protection Program) both in the top 30 search terms for both TMT and non-TMT projects. However, they both ranked much higher on the list for non-TMT projects. This suggests that the TMT sector took less of a hit from COVID, and so had less need for PPP. 

Conversely, some search terms crop up lots more in TMT projects – these include ‘Open Source’, ‘GDPR’, ‘Amazon’ and ‘Microsoft’ (the latter two being cloud providers). GDPR is the legislation governing data privacy in the EU and UK, and can lead to steep fines for corporations that fail to protect customer data adequately. This makes cloud security and technical due diligence critical during TMT M&A transactions.

Furthermore, software companies must undergo technical due diligence (in addition to regular due diligence), which involves scrutiny of their code, digital infrastructure and architecture. Software weaknesses or security vulnerabilities may result in data breaches, loss of data, and both brand and financial damage. Meanwhile, open-source software (software written and managed by a community) is increasingly popular among businesses. But it can also be more vulnerable, making open-source due diligence particularly important.

Another curious development is deal speed. Historically, a TMT deal would take about the same amount of time as any other. But in the last 12 months, we’ve seen a gear shift. Based on the M&A transactions conducted through Datasite, TMT projects have been completing in 30 fewer days compared to deals in other industries. It underlines the fact that agility is crucial in today’s competitive deal making environment.

Yet this is despite unprecedented levels of due diligence. TMT projects have always had about 10% more pages than other types, and that trend continues with higher levels of due diligence. Our data now shows that they also have around 25% more users than other projects. This could be due to their greater complexity, higher scrutiny and specialization, the involvement of more parties, and the rise of 'club deals' involving collaborations between PE firms.

Dealmaking is as ripe for digitization as any industry – if not more so. Now that both speed and accuracy are at an all-time premium, PE teams need ways to accelerate deals while simultaneously deepening due diligence. The only practical solution is top-quality automation to streamline essential processes, freeing up dealmakers to focus on high-value tasks.

By your side across the PE lifecycle 

Datasite has supported PE firms of every size over more than half a century of M&A. We’ve been at their side at every step from fundraising to completion, on both buy side and sell side. And in challenging sectors such as TMT, we have given dealmakers the confidence they need to complete transactions with ease.  

The Datasite product suite has been crafted for your industry, based on our decades of experience and input from thousands of leading dealmakers. Your PE deal becomes one end-to-end process that never leaves the safety of the data room. Fundraise, acquire and exit with ease, moving seamlessly from marketing and preparation to due diligence and beyond.  

Datasite – a good deal better 

TMT deal activity shows no sign of slowing down any time soon. Datasite can help you ride the crest of the wave. That’s why the top 20 global PE firms use us. It’s why we’re the choice of 78,000 PE professionals worldwide. Because Datasite is so much more than a data room. We’re a great investment in great investments. To find out more about what we can do for you, visit us at

PE's Lockdown Love Affair

Learn more about why deal activity in the tech sector has been soaring.

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