Technology, Media & Telecoms (TMT)

We have an in-depth understanding of the sub-sectors and industries that fall within the TMT sector, with an experienced team who have worked in this space for 32 years, and are focused specifically on TMT deals.

 

The TMT sector

With the advent of personal computing in the 1970s, and the implementation in the 1990s of World Wide Web after its invention by British scientist Tim Berners Lee in 1989, the digitalisation of society and subsequent impacts that this new technologies revolution has had on the global economy is a powerful trend that has been reshaping and disrupting business models in every economic sector and industry since.

The ways in which we work, communicate and consume have hugely transformed with the arrival of this new post-industrial information era. The so-called ‘Information Age’ has brought about unprecedented global interconnectivity and a rapid increase in data generation and consumption; as well as major advances in tech intelligence, and an exponentially evolving speed of communication and information technology and related software applications.

Whereas market structures and drivers are different in almost every Technology, Media and Telecoms (TMT—also sometimes referred to as Technology, Media, and Communications or TMC) sub-sector and industry, business activities that involve TMT offer fascinating growth opportunities for digital and tech media company funding and entrepreneurial creativity, which in turn fuel M&A activity, especially in the digital media mergers and acquisitions space.

How do you estimate the value of a media company, the M in TMT?

Are you in the process of deciding whether a particular TMT company might offer a good investment opportunity as part of a tech, telecoms or digital media mergers and acquisitions deal? Perhaps you’re considering how to obtain the best returns if your TMT company is looking at divestment. Are you in the process of assessing your TMT business’ worth in terms of a company valuation so as to access private equity or to secure investment through company funding.

In these types of instances, several contextually-sensitive metrics need to be considered or factored in that are relevant to the kind of financial transactions unique to this sector. This is especially the case during times of major market transformation or acceleration due to factors affecting the global economy, including economic downturns and recoveries; or crises and disruptions like the SARS-CoV-2 (or COVID-19) pandemic.

The global economy’s digital evolution as a result of events like the pandemic has been exponential, seeing trends such as a wave of TMT sector consolidation. All of this presents companies and investors with many promising opportunities.

At these times consumer behaviour frequently changes, and the way that companies work or do business in response often requires fast pivots.

Despite the COVID-19 crisis affecting many sectors and industries in unexpected ways, the economic impact for the TMT sector has largely been neutral, or for some industry segments, even positive. This is especially true for digi-tech enterprises that have been able to quickly adapt to changing economic environments and markets in a rapidly shifting landscape.

For example:

  • The impact on certain tech companies has been mixed, with B2B tech product companies more negatively affected than B2C companies. An illustration of this is that there has been a big increase in the use of tele-conferencing services, e-commerce platforms and tele-medicine apps.
  • While many traditional media and entertainment businesses have been negatively affected (i.e concert venues, cinemas and theatres), the digital media and entertainment and gaming market segments have seen strong growth, with the former switching to platforms that offer video on demand, and the latter seeing high demand for downloads.
  • Another development is the switch to digital advertising from traditional advertising, which is facing a swift decline.
  • Also, the business activities of telecom operators have expanded as a result of increased data traffic.

Taking all these variables into consideration – in terms of returns – because of its unique nature and the continual development of new tech, deals within the TMT sector have the potential to generate high returns relative to other sectors, especially when investors get in (or divest) early.

Here are some of the most important considerations for establishing a TMT company’s value:

  • What is the company’s growth potential in the market, and how scalable is its offering?
  • How much of the market can it capture over time, and how rapidly?
  • What is the quality of its earnings potential, and how predictable are its earnings?
  • How innovative or unique are its offerings, and are there high barriers to entry?
  • Does it have strong brand recognition—will its customers be willing to pay a premium, or will it be competing on price?
  • What is the company culture of the business?
  • What are the business’ talent acquisition and retention policies?
  • How strong is the executive management team, how committed and experienced are they, and do they work well together?

  • What are the capabilities and capacities of the company’s finance team?
  • What is the composition, experience and state of its board, if it has one?
  • Are board members predominantly independent so as to offer proper oversight and guidance?
  • Does the business have a clear and well-defined long term vision and strategy for achieving its goals?
  • What is the state of the company’s financials and how well does it keep track of its data?
  • What is its compliance and due diligence track record?
  • Does the organisation have sound operational policies, systems and procedures in place, especially for the purposes of accurate financial reporting?
  • How adaptive and flexible is the organisation?
  • What does the business’ competitive landscape look like?
  • How does the business differentiate itself from its competitors?
  • How does the company’s offering fit into global economic trends and meet current (and future) B2B/B2C customer needs?
  • Does the company have appropriate tech security measures in place?

Regent Evolution is your merger and acquisition consulting partner. From strategy phase, to seeking a target business to merge with or acquire, and even the somewhat dreaded due diligence, we’ll get you to a lucrative sale.

We have partners who have sold TMT businesses which they’ve owned or managed. They have sat on the same side of the desk as you.

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