Global M&A Industry Trends in Technology, Media & Telecommunications
As COVID-19 continues to impact the global economy, investors appear to view many industry sectors within Technology, Media & Telecommunications (TMT) as highly attractive, with the Nasdaq Composite recently hitting all-time highs, supported by companies either shielded from, or directly benefitting from, the ongoing crisis. Nevertheless, the first half of 2020 saw a significant decline in global TMT mergers and acquisitions (M&A) as investors focused on liquidity, cost containment and short-term portfolio protection.
COVID-19 accelerated existing trends as businesses continue shifting to all things digital, e-commerce displaces traditional stores, mobile app-based food-delivery providers capitalise on social-distancing restrictions, consumers hasten their switch to streaming over traditional media and remote working increases. The movement towards digitalisation will spur companies to use M&A to improve their capabilities in this space. TMT companies that adapt their strategy and deliver value in the current environment will be strongly positioned when the economy recovers. The large technology companies will continue to do well, although they will need to deal with increasing regulatory scrutiny globally.
We expect TMT M&A activity to pick up in the second half of 2020, although global trade frictions will remain a headwind throughout the year. M&A activity is expected to return as companies focus less on capital preservation and start seeking new opportunities. Those companies affected by COVID-19 will take a closer look at their existing businesses to evaluate which areas are core and which to divest.