TMT M&A: positive trends amid volatility

Analysis from our TMT Spring 2025 M&A review showed a 27% reduction in deal volumes in Q1 2025 versus Q4 2024. However there has been signs of recovery with an uptick in volume by 9% in Q2 2025. The slow start to the year is a result  of political and macroeconomic uncertainty delaying deals, coupled with high deal volumes at the end of 2024 as deals rushed to close ahead of the Autumn Budget and potential capital gains tax (CGT) changes.

Positive trends have emerged, however, including international appetite, valuations and mid-market deals:

Seven key takeaways:

1 The TMT sector is navigating a volatile market landscape,however the market is showing signs of recovery after a challenging Q1. The IT services and telecoms sub-sectors have seen growth however there has been a decrease in media deals. .

2 Positive trends have emerged:

• there remains strong global interest in TMT investments despite the noise surrounding tariffs and international trade dynamics
• valuations have continued to increase since starting to rise in 2023
• mid-market transactions, particularly those ranging from £10 million to £30 million, have seen an uptick in volume.
• the uptick in Q2 was driven by renewed activity in IT services and telecoms, although overall deal values remained unchanged from the same period last year. Total disclosed deal value reached £15.9bn, a sharp increase on Q1.

3 Transactions are taking longer to complete. Political and macroeconomic uncertainty has led to extended decision-making timelines, increased due diligence, and longer processes. Also, businesses are finding it takes longer to come to market, mostly due to performance metrics.

4 Software has emerged as a hotspot of activity. Both corporate and private equity buyers are drawn to this sub-sector due to its strong fundamentals and confidence in sustained revenue growth and future performance. Specific areas of interest from investors within software include government software, edtech, and HRtech.

5 Appetite for technology investments remains strong among private equity (PE) and venture capital firms. In Q2, PE transactions rose 13%, however trade deals still dominated. In our 2025 private equity outlook, we surveyed 200 PE firms globally, which revealed that technology ranks as their second priority for investment. Read more: Global optimism, UK caution: Private equity outlook 2025

6 AI is an important area for tech M&A. Companies which can articulate a clear AI strategy and demonstrate robust AI solutions will attract increased interest and premium valuations during the M&A process.

7 For businesses considering an exit, our three top tips are:

• appoint an adviser early
• be flexible in your options
• be aware of your performance, pipeline and business plan.
  
  

For more insight and guidance, get in touch with Adam Bunch.