According to the fourth report in SourceMedia’s Mid-Market Pulse (MMP), dealmakers expect M&A in the technology, media and telecommunications (TMT) sector to expand faster than the overall market. The MMP, published by Mergers & Acquisitions in partnership with McGladrey LLP, is a forward-looking sentiment indicator that monitors near-and intermediate-term outlook for merger and acquisition activity within the middle market.
“Activity in TMT will gain more quickly than in the overall market and in the financial services sector, but more slowly than in health care and manufacturing,” said Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions. “Advances in cloud computing, data analytics, mobile applications and medical devices are among the innovations driving M&A in TMT.”
The 3-month composite score for TMT was 79.1 compared to 75.1 for the overall market. The intermediate term, or 12-month, forecast put TMT at 79.5 against 70.8 for the overall market.
Each month, the MMP index spotlights an individual industry and presents respondents’ expectations for deal activity within that specific sector. This month’s index focuses on the technology, media and telecom (TMT) sector.
“Health care is anticipated to be higher than TMT, with a 3-month score of 82 and a 12-month score of 80.5,” Flynn said. Manufacturing also will outpace TMT, with a 3-month score of 80.6 and a 12-month score of 81.8. Growth in financial services, however, is expected to be slower than TMT, with a 3-month score of 70.8 and a 12-month score of 74.7.
For a complete analysis of the MMP’s most recent data, go to http://www.TheMiddleMarket.com/mmp-TMT.
Inside the MMP
The Mergers & Acquisitions Mid-Market Pulse (MMP) is a monthly barometer of sentiment in the mergers and acquisitions business derived from monthly surveys of approximately 250 executives in private equity firms, investment banks, lenders, and advisory firms in accounting, law, and consulting.
Based on a regular set of recurring questions about expectations and trends across a range of key issues in M&A, the MMP is a leading indicator for potential changes in momentum in M&A activity. Various indicators that make up the MMP include projected deal volumes and pricing, staffing resource utilization levels, and the expected impacts of economic conditions, taxes and regulatory policy on future M&A activity.
Survey responses describe expectations and outlooks for three- and 12-month forward periods to arrive at indicator scores. Respondents also are asked to elaborate on their responses and provide opinions about other conditions that affect their M&A outlook.
A Look at the Number
In the near term, the TMT sector scored higher than the overall market in two components: tax impact and regulatory impact. In the intermediate term, TMT nearly swept the components, ranking higher than the overall market in economic impact, deal volume and deal value, among others.
Most notably, TMT scored 85.8 in regulatory impact compared to 81.3 for the overall market in the 3-month forecast. In the 12-month view, TMT scored 90.9 in deal volume against the overall market’s 90.7
What Respondents Are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many echoed the MMP Index’s sentiment about the role taxes will play in M&A activity.
Dealmakers cited a move to the cloud, software-as-a-service, mobile trends and IT/data security as influencers on their positive outlook for the TMT sector.
Others credited the investment environment. “Multiples are high, which makes it a good time to come to the market for sellers,” one dealmaker said.
Another added that the “aggressiveness of lenders will lead to loosening loan structures.”
While some are wary about regulatory requirements, others point to economic improvement in the TMT sector.
SourceMedia, an Investcorp company, is a business-to-business media company serving the financial industry and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional information services – both print and digital – industry-standard data applications, in-depth seminars and conferences, research, and specialized marketing services.
About SourceMedia Research
SourceMedia Research was launched in 2010 to operate in tandem with the company’s existing news and analysis, events and marketing solutions operations. Building on SourceMedia’s strong audience communities, and working closely with its editorial teams, SourceMedia Research provides a full range of industry-standard capabilities, including quantitative and qualitative surveys, data analysis, panel management, and white paper development. Surveys are developed independently by our subject matter experts, as well as in consultation with syndicate partners and clients. Data and insight derived from SourceMedia’s research studies can support strategic and tactical decision-making, product development and demand analysis, and the creation of custom research, thought-leadership and positioning programs.
About Mergers & Acquisitions
Mergers & Acquisitions covers all aspects of middle-market dealmaking, including identifying acquisition targets, negotiating transactions, performing due diligence, and closing deals. Serving nearly 18,600 print subscribers, our monthly magazine is published in partnership with the Association for Corporate Growth (ACG), a global organization comprised of thousands of private equity firms, corporate officials and intermediaries. With more than 25,000 unique monthly visitors, themiddlemarket.com is continuously updated, providing real-time information and analysis of news and trends in M&A. Our online video series features interviews with high-profile dealmakers, including private equity partners, strategic buyers, investment bankers and other advisers.
McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 6,700 people in 75 cities nationwide. McGladrey is a licensed CPA firm and serves clients around the world through RSM International, a global network of independent assurance, tax and consulting firms. McGladrey uses its deep understanding of the needs and aspirations of clients to help them succeed. McGladrey meets the needs of private equity firms and their portfolio companies with integrated transaction advisory, tax, assurance and consulting services. Clients benefit from a single-point-of-coordination service model and teams that operate as strategic partners throughout the private equity life cycle. For more information like us on Facebook at McGladrey News, follow us on Twitter@McGladreyPE and/or connect with us on LinkedIn.
Mary Kathleen Flynn
Editor in Chief