Tech, Media, Telecoms

Advisers who understand your sector

Large tech players have substantial cash reserves available for acquisitions and are willing to pay for the right businesses as they look to build and consolidate in areas including Software-as-a-Service, Artificial Intelligence, Machine Learning, Data Analytics, Digital and Performance Marketing, and IP-based technology.

PE firms are also showing a very high interest in the sector, due to opportunities for high growth and the access to recurring revenue streams that the tech industry provides.

How much are companies worth in the Technology, Media and Telecoms sector?

The following 3 graphs will give private business owners a broad indication of the value of their business:

1. The Enterprise Value to EBITDA* multiples on which comparable listed companies are trading

TMT graph 1 - reversed-1

At the end of H1 2019, the global, all market average Enterprise Value to EBITDA multiple for listed TMT companies was 13.8x. This was greater than for the previous six months and slightly up on the previous year, when listed TMT companies were trading on a multiple of 12.5x. Within the TMT sector, trading multiples varied between 7.7x and 19.1x across the range of sub-sectors. Smaller businesses generally traded on lower multiples.

* EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation
† Note, the Enterprise Value to EBITDA multiples above are for listed businesses, and it is generally the case that privately owned businesses are valued at a discount. Listed company data was accurate at 01/07/2019

2. The multiple of EBITDA paid by acquirers of comparable businesses

TMT graph 2 - reversed v2-1

The average multiple of EBITDA paid globally in TMT transactions has declined slightly over the past few years. It currently stands at 10.4x. When reviewing these multiples we break out businesses in the range $5-150m, as they tend to have unique attributes which affect their valuation. Smaller businesses have generally been sold on lower multiples.

3. The volume of M&A transactions and acquisitions

TMT graph 3 reversed v2-1

In H1 2019, there were 3,459 transactions globally in the TMT sector. This is slightly down on the preceding 6 months, when there were 3,538 transactions. Although slightly declining over the last few years, the high number in the last 6 months suggests demand for TMT businesses remains buoyant.

For further information as to how these valuations and statistics are computed, and their impact on your transaction, please contact us.