Our last TMT report asked whether a rise in tech stocks at the end of 2023 would translate into a renewed appetite for deals.

Analysis of Q1 data from CIQ and MegaBuyte suggests 'yes,' showing a rise in transaction volumes for the first time since 2022.

Gradually falling inflation and an increase in lender appetite and activity levels are fertilising the green shoots of recovery, which we expect to sprout steadily throughout the year.

Deal volumes

There were 232 deals in the first quarter of 2024, a 7.9% increase on the previous quarter. Software deals drove the uptick, jumping 27%, while activity in all other subsectors declined.



IT services




No of deals






QoQ % change






YoY % change






Source: CIQ and MegaBuyte

Quarterly TMT deal volumes and disclosed deal values


Source: CIQ and MegaBuyte

Why is software leading deal recovery?

Graph 2 depicting why is software leading deal recovery

Source: CIQ; MegaBuyte and Grant Thornton analysis

Private valuations

EV/sales multiple


IT services

Quarterly end valuation



Five-year average



QoQ % change



YoY % change



Source: CIQ and MegaBuyte

Software valuations were driven exceptionally high following the pandemic, and the sector was the first to ‘bottom out’ during the economic and geopolitical headwinds experienced over the last 18 months.

Increasing visibility on a UK economic recovery has meant that software has bounced from its inflection point and somewhat realigned the price aspirations of each side of the deal table.

Price stabilisation has given private equity (PE) the confidence to exit software assets – perhaps inspired by Leonard Green & Partners' investment in Iris Software at the end of 2023, which valued the company at £3.15 billion.

Q1 UK PE exits included August Equity's sale of healthcare solutions provider, Agilio Software (9.2x return) to Five Arrows and TA Associates and GCP's sale of market and credit risk software provider, CubeLogic, to Bowmark Capital. Increased confidence in the outlook, and more healthy valuation multiples for the right software assets of reasonable scale, has seen more PE-backed software assets exploring market appetite following extended hold periods through a fallow 2023.  Secondary PE deals in software are emerging from their hibernation period.

Valuations of IT services, however, remains relatively subdued, versus the heights of the immediate post-pandemic months, as the market continues to rebalance as pricing aspirations fall in line.

Public markets –  Santa rally momentum fails to inspire UK IPOs

TMT share prices - FTSE 250 and NASDAQ versus sub-sectors 


SaaS valuations have realigned with enterprise software in the public market

  Software SaaS Cloud
QoQ % change 6.0% -3.3%
yoy % change 22.9% 13.8%
Average 8.2x 12.14x

Source: CIQ and MegaBuyte

Public valuations - software/SaaS

Graph 4 depicting the Public valuations - softwareSaaS

Source: CIQ and MegaBuyte.

Public valuations: telecoms remain flat while media and IT services bounce back





IT services

QoQ % change




YoY % change









As tech stocks continue to perform steadily on the public markets, take-private activity is slowing and shifting from PE to strategic buyers. For example, in the quarter US-based communications equipment firms Viavi and Keystone Technologies engaged in a landmark £1 billion bidding battle for Spirent Communications plc which is still ongoing, as inbound interest from the US and Asia Pac shows signs of increasing.

Appetite for UK IPOs remains very limited: there were just three listings in Q1, none of which were in TMT.

Notably, Advanceadvt Limited started trading on AIM following the acquisition last year of a portfolio of software businesses from Capita. However, secondary fundraising was more optimistic with four equity capital market (ECM) technology deals, including KKR's USD 65 million investment in Darktrace, as the UK cyber provider continues to go from strength to strength. As we go to press that performance from Darktrace has attracted a recommended near USD 5 billion offer from US PE-software poster child Thoma Bravo, illustrating that international investors continue to see value in listed UK technology assets. It seems the capital markets will continue to be a feeding ground for technology deals for some time to come, with a strategic need for UK markets to see that population refreshed through a reopening of the IPO market.

Despite high-profile Q1 media listings in the US – Trump Media and Reddit both went public in March – global appetite for IPOs also remains low in a year marked by elections and geopolitics.

A busy quarter for our team


Seven trends in TMT

 1 Debt markets open up

Throughout 2022 and the first half of 2023, lenders were caught in a perfect storm: high interest rates made borrowing more expensive, while inflation negatively impacted margins and cash generation, putting strain on many borrowers' ability to service debts. Now there’s more visibility on inflation falling (and, consequently, interest rates, although analyst consensus estimates have pushed back any potential cuts further into 2024), lender appetite has begun to return.

Q1 2024 data from Debtwire shows that European institutional loan market volumes (across all sectors) were triple that for the same period last year and 83% up on Q4 2023. Funds were overwhelmingly deployed in refinancing and recapitalisations, a trend mirrored in our Q1 UK TMT data.

2 Buyers seek vertical software solutions

PE is edging its way back into TMT via the relative safety of vertical software solutions. For example, in March 2024, LDC invested in 15below, a software platform that enables airlines to inform passengers of schedule updates and unplanned disruptions.

3 Compliance and ESG continue to drive deals

Buyers are also playing it safe with targets that benefit from non-discretionary spend associated with compliance; regulation; and broader ESG drivers. 

In January 2024, growth investor Synova achieved a 6.5x return on the sale of Vistair to Insight Partners and Liberty Hall Capital Partners. Vistair provides data management software to the aviation and defence sectors.

4 Corporates / PE-backed trade seek bolt-ons

Realignment of valuation aspirations are giving large trade buyers the confidence to seek acquisitions. In January 2024, Access Hospitality (backed by Hg and TA Associates) acquired guest Wi-Fi and analytics specialist Wireless Social. Many PE-backed assets that have sustained a strong buy and build strategy within the UK are spreading their wings more aggressively internationally to expand their addressable markets.

5 International investors target the UK

Though outbound deals fall outside our data set, we have observed that PE-backed UK software groups, such as Iris Software and Access, are seeking international assets, including those based in the USA. In return, we’ve seen an uptick in overseas investors targeting UK assets.

In March 2024, Bain Capital acquired the carved-out mortgage arm of Iress Limited. Apax also made two acquisitions during Q1. More recently, we've seen activity from US buy-and-build specialists hoping to replicate their domestic success in Europe. In April 2024, for example, Evergreen bought UK-based IT service provider Digital Origin.

6 All quiet on the election front

It isn’t unusual for the prospect of a general election to stir up M&A activity. However, it seems that capital markets don’t perceive a huge difference between the fiscal policy of the two main parties (and any anticipated change has been priced in). Likewise, in the private market, we're not witnessing the same panic as previously seen around areas such as capital gains tax. There's a potential risk of deal delay driven by election uncertainty impacting activity in the final quarter, which may mean the full recovery in deal activity may not feed through until 2025.  

7 Trade cashes in by carving out

During four years of challenging economics, large TMT companies have had time to identify assets that are absorbing too much capital and management time. This has led to several carve-outs in the sector. In March 2024, Inflexion acquired Marlowe plc’s governance, risk, and compliance software and services division.

A steady climb to 2025

While Q1 deal activity shows TMT M&A is regaining its energy, the sector still faces challenges.

Inflation fell more slowly than expected in April, increasing the chances that the Bank of England will delay cutting interest rates. Financial markets now predict a (0.25 percentage) cut won't come until November. The ongoing conflicts in Ukraine and the Middle East will also continue driving financial uncertainty.

Despite this, Q1 TMT data demonstrates faith in a resilient sector with strong underlying fundamentals. We anticipate the green shoots of recovery will continue to grow and potentially flourish throughout 2024.

For more insight and guidance, get in touch with Andy Morgan or Gareth Davies.


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