M&A Report: Technology, Media & Telecommunications (TMT)

Valuable mix of resilience and innovation drive TMT dealmaking

During the first half of 2025, the technology, media and telecommunications (TMT) sector has emerged as one of the most active for M&A transactions, both in the UK and on a global scale, with activity being driven by high-value deals and a number of crucial tailwinds.

Despite significant macroeconomic challenges, the rapid technological advancements that the three distinct, yet closely interlinked, sub-sectors are seeing have ensured that dealmaking has remained strong in the face of such difficulties.

The rapid pace of change across TMT, largely as a result of AI and other digital transformation, is naturally not only encouraging strategic activity within the industry, but also attracting considerable interest from investors such as private equity firms.

However, significant economic headwinds remain, along with a host of other concerns - with major uncertainty over factors including President Trump’s tariff policies and the UK’s regulatory approach to AI - that could put something of a dampener on dealmaking.

Looking ahead, though, the strong underlying fundamentals that have motivated much activity across the sector are certain to continue, meaning that there is still a huge amount of activity to come, with the likelihood being that M&A could in fact accelerate, providing economic conditions are favourable.

TMT emerges as leading industry in 2025 M&A
TMT has emerged as one of the most prominent sectors for M&A so far in 2025, both in the UK and globally. According to a recent McKinsey report, the sector overtook global energy and materials (GEM) as the most active sector globally, with the value of deals in the sector increasing by 39 per cent compared to the same period a year earlier.

As per McKinsey’s report, TMT, along with the GEM and Financial Institutions sectors, accounted for 59 per cent of the value of all deals announced during the first half of the year, with TMT deals particularly dominant in the Americas.

Interestingly, this increase in value was accompanied by a not insignificant drop in volume, indicating that buyers in the sector (whether strategic or financial) are increasingly targeting fewer, but higher-value transactions.

According to a PwC report, TMT deal volumes worldwide fell by 11 per cent year-on-year during the first half of the year, with 5,336 deals reported worldwide, compared to slightly under 6,000 during the first half of 2024.

This came despite a 20 per cent increase (as per PwC’s figures) in deal value. Unsurprisingly, high value deals were a prominent factor, with the total deal value standing at $390 billion, more than $170 billion of which was attributed to high-value deals - a significantly greater proportion of the total than in any of the preceding five halves.

The TMT sector was similarly prominent in UK dealmaking during the first half of the year, albeit with deal volume proving to be more resilient than it was on a global scale. According to PwC, there were 307 M&A deals in the UK’s TMT industry during H1 2025, putting the sector third overall behind Industrials and Services (400 deals) and Consumer Markets (310 deals).

In terms of deal value, the sector was joint second alongside Industrials and Services during H1 2025 (each recording £10.8 billion in deals), behind only Financial Services (£17 billion). According to PwC, the prominence of these three sectors in the UK’s dealmaking statistics in the first half of this year “reflects renewed confidence in high-value dealmaking”, with the average size of disclosed transactions across all sectors rising to £169.2 million during the period.

Despite the resilience of TMT M&A, both in the UK and globally, there is still an underlying feeling that more is yet to come and that the sector, like many other high-growth industries, is being constrained somewhat by ongoing economic and geopolitical volatility, something that is widely cited as a key reason for sluggish deal volume in particular.

However, data indicates that activity accelerated during the second quarter of 2025, suggesting that momentum is potentially building as we head towards the final quarter of the year. Should economic conditions improve, uncertainty over trade disputes ease (something that seems increasingly likely in the wake of the UK’s new investment deal with the US) and private equity activity continue, then the sector appears poised for a major burst of M&A activity.

The major M&A trends across TMT

Technology
The technology sub-sector, which is the most significant component of the TMT industry, can be broadly described as a segment covering businesses involved in the development and distribution of hardware, software and their related services.

This spans not only companies that manufacture and develop computers, smartphones, microchips, computer components and software platforms, but also those involved in cloud computing, AI and the distribution of IT services.

Hand-in-hand with being the most broad-ranging sub-sector within TMT, technology is also typically the busiest in terms of M&A activity. During H1 2025, for example, the technology sub-sector accounted for 78 per cent of deal volume and 83 per cent of deal value in the global TMT sector, as per PwC data.

Providing a microcosmic view of the sector as a whole, the global technology sub-sector saw an 11 per cent drop in deal volume during the first half of the year, according to PwC, as M&A was impacted by macroeconomic and geopolitical headwinds, while a trend towards larger, higher-value deals saw deal values increase 15 per cent.

There are a few key trends that are currently shaping M&A within the technology sub-sector, most notably software (largely driven by AI, cybersecurity and Software-as-a-Service), strategic activity and the growing role of private equity investors.

Globally, software deals accounted for 65 per cent of tech’s total deal value in 2024, according to PwC, with AI and resurgent equity markets cited as key factors in high valuations for software company acquisitions.

Grant Thornton describe software as “the largest driver of M&A” in 2025, with activity driven by the “high margins, recurring revenues and predictable cash flow” that software acquisitions offer amid economic uncertainty.

The appetite for software acquisitions is demonstrated by the strong valuations that software companies are attracting. According to Grant Thornton data for 2024, while the average year-end EV/sales multiple for UK software companies was below the five-year average (4.6x in 2024 compared to a 4.7x five-year average), the quarterly-end valuation at the close of the year passed the five-year average, with average valuations in Q4 standing at 4.9x EV/sales.

Analysing the key software developments that are driving M&A activity in 2025, RSM UK highlight four key innovation themes: generative AI, cybersecurity, vertical SaaS and quantum computing. James Bull, Corporate Finance Director & TMT Industry Analyst at RSM states that “AI and data-rich SaaS platforms typically attract the highest multiples”, while high-profile cyberattacks and an increasingly stringent regulatory environment are driving cybersecurity deals.


Earlier this year, Atlas Cloud, a Newcastle-based IT services and cybersecurity provider, announced the acquisition of Challow Design Network Services, a specialist IT provider in the legal industry, in a deal that bolstered both its geographical reach and legal sector offering.

King’s Cross-based Challow Design Network Services is a specialist IT provider that offers a fully managed, compliance-first solution designed for law firms and barristers' chambers.

Post-acquisition, Atlas Cloud planned to leverage its operational infrastructure in order to widen the availability of Challow Design Network Services’ IT platform for the legal sector.

According to Atlas Cloud Chief Executive Pete Watson, Challow’s “specialist solution for the legal sector complements our own security-first approach and operational expertise”, adding that the firm would now shift its focus to innovation, AI and automation.

As RSM UK note, these growth drivers are encouraging dealmaking among both trade buyers and financial investors. James Bull asserts that demand for AI, cybersecurity and SaaS assets will continue to drive demand among industry buyers, while investor interest in these areas is cited as a key factor in TMT establishing itself as the second most popular sector for PE investment in Europe.

Like much of the broader sector, technology investments suffered amid the uncertainty seen during Q1 2025 (it should also be noted that Q1 2025 figures suffer in comparison to Q4 2024 data, when there was a flurry of activity ahead of anticipated CGT increases in the Autumn Budget).

However, momentum has built, with Grant Thornton reporting a 9 per cent rebound in activity during Q2 2025, including a 13 per cent increase in PE technology investments. Despite the ongoing preponderance of strategic deals in the tech space, private equity activity could be set to rise even more sharply, with Grant Thornton also noting that in their 2025 private equity outlook poll of 200 global PE firms, technology was ranked as the second top investment priority.


In March 2025, digital transformation specialist Hippo Digital was acquired by Exponent Private Equity in a deal valued at around £150 million. The deal came after Hippo Digital reported EBITDA of £8.8 million for the year to March 31 2025, generating an EBITDA margin of 16 per cent and seeing year-on-year EBITDA growth of 7.3 per cent.

Leeds-based Hippo Digital was founded in 2016 and provides design solutions for the NHS and other UK public sector bodies, with a team of around 500 staff working across six UK offices. Key clients include NHS England and NHS Business Services Authority (BSA), the BBC and a number of central government departments, including the Ministry of Justice and Department for Education.

The deal value represented a 17x EBITDA multiple and a 2.7x revenue multiple - a premium valuation associated with high-growth businesses in the digital transformation space. Such premium valuations are particularly seen among firms serving the kind of government and public clients that Hippo Digital does.

Post-acquisition, Exponent will support the firm’s existing management team to continue scaling its operations, while strengthening its capabilities in artificial intelligence, data and engineering. Exponent partner Mark Taylor said that Hippo Digital “will play a critical role in unlocking the government’s strategy of digitising public services.”

Media
The media sub-sector of TMT focuses on the creation, aggregation and distribution of content. This includes television networks, film studios, print publishers, music companies and online streaming platforms, as well as social media, advertising, publishing and gaming companies.

The sub-sector is far smaller than the technology industry, with PwC’s H1 2025 report putting the total number of deals in the global entertainment and media subsector at 590 worldwide during the first half of the year, compared to nearly 4,500 in the tech space.

However, given the sector is so much narrower than the tech industry, this still indicates a robust level of dealmaking. As with the tech industry, much activity in the media landscape is by the rapid development of AI and private equity activity, as well as an interesting mix of mega deals involving major platforms and big tech companies and smaller mid-market deals.

According to BDO, while major deals understandably attract the bulk of headlines (for example, the protracted $28 billion merger of American media giants Skydance Media and Paramount Global), innovation within the sector actually largely occurs in the mid-market M&A space.

BDO writes: “These deals are agile, often founder-led, and typically focused on high-growth segments like AdTech, Connected TV (CTV), social media and social commerce.”

As is so often the case, while not a dominant market force, the UK punches well above its weight in terms of media M&A, with activity bolstered by its status as a cultural hub and digital media leader.

According to BDO’s 2023 Mediatalk report, 12 per cent of deals in the global media sector last year involved UK-based firms, with a particular trend for cross-border investments in areas such as AdTech, publishing and broadcasting and film and television.

BDO Deal Partner, Advisory Head of TMT Conor Lambert also states that the UK’s strong ecosystem of tech-enabled and/or AI capable companies are increasingly attractive to both financial investors, as well as strategic consolidators seeking to future-proof their operations.

On a global scale, AI is understandably proving to be a major driver of media M&A activity, with AI tools being used across the sector to drive efficiencies, enhance (or even create) content and engage audiences more effectively.

In a report examining UK media and marketing M&A during the second quarter of 2025, Moore Kingston Smith noted that, despite a slight drop in activity compared to Q1 2025 (Q2 2025 in fact had the joint lowest deal volume for the past 10 quarters), the proportion of deals that were technology-led increased significantly.

Moore KS write that AI is “leading the way” in this area: “Technological advancements, particularly in AI, are transforming the media and marketing services sectors. New technology platforms are starting to compete with traditional studios in terms of reach, while the advertising agency model is changing to a technology-enabled, AI-driven, comprehensive approach.”

Naturally, this is driving significant M&A activity, with buyers increasingly seeking to acquire AI-adjacent capabilities as they reshape their portfolios, seek to tap into the latest technologies and strive to keep pace with the industry’s rapid rate of change and technological development.

This was particularly notable in the marketing services space, which, according to Moore KS accounted for 53 per cent of tech-led deals across the media and marketing sector, followed by adtech (35 per cent) and mediatech (12 per cent).

According to the report, 30 per cent of deals in the marketing sector during Q2 2025 were technology-led, compared to 25 per cent in Q1 2025 and significantly outstripping the 2024 average of just 21 per cent.


In May of this year, marketing comms group MSQ announced the acquisition of innovation and strategy research firm The Forge.

The Forge generated annual revenues of approximately £4 million at the time of acquisition. The consultancy operates a unique "director-only" model, providing customer insight and commercial expertise to clients, using its insights to develop customer-driven business strategies. It serves global clients across healthcare, consumer products, retail, fashion, entertainment, and finance sectors. Key clients include Unilever, Haleon, and Perfetti, with 90% of its work being multi-market.

The deal was described as complementing MSQ’s existing business, which includes insights, analytics and strategy firm Freemavens.

According to MSQ Group CEO Peter Reid, the acquisition “brings greater depth and breadth to our strategic thinking, unlocks innovation growth opportunities for our clients and provides an opportunity for us to extend the scope of The Forge’s work beyond strategy and into activation harnessing our broader skills particularly in creative, design and digital.”

Telecoms
Telecommunications comprises companies providing infrastructure and services that enable communication over distances. This includes fixed-line and wireless phone operators, broadband and internet service providers, satellite communications, and companies supporting 5G and Internet of Things (IoT) connectivity.

As with media, telecoms is a significantly smaller part of TMT that technology, with PwC putting the sub-sector’s total estimated global deal volume during the first half of 2025 at just 293 transactions, almost half of the volume seen in media.

This is not to say that the sector does not see a significant level of dealmaking, however, with telecoms delivering one of the UK’s biggest deals of 2025 so far in the shape of phone operators Vodafone and Three’s £16.5 billion merger, which completed in May.

While M&A activity has generally been slower in the sub-sector so far this year, Grant Thornton identifies telecoms as one of the central growth drivers behind the Q2 uptick in TMT activity and there are some major themes that could drive further M&A.

As per PwC, one of the central investment themes for telecom companies is AI-related infrastructure in areas including data centres, fibre and 5G. While major deals in this area have largely been international, so far, the UK’s digital infrastructure push and the government’s efforts to encourage AI development within the UK could see major telecoms providers seek to build their AI-related infrastructure through M&A.


At the outset of this year, real estate investor Castleforge acquired Redhill Data Centre in partnership with data centre operator and advisory firm Galaxy Data Centers. The acquisition of the site marked the firm’s first foray into the data centre market.

Redhill Data Centre, located in the Foxboro Business Park near London, sits on a campus spanning 11,800 sq meters, with three buildings and 26MVA of power. The site is home to a number of major tenants, including Fortune 500 companies and organisations from sectors including AI and financial services.

According to Castleforge, tenants are attracted by the site’s secured green energy, low-latency connectivity to data centre hubs like Slough and the Docklands, and scalable infrastructure.

Adam MacLeod, Partner, Castleforge, commented: “Data centres have been an attractive prospect that we have been monitoring for some time, but with advancements in AI and cloud computing accelerating demand, we have been eager to find the right opportunity in which to invest.”

Another driver of telecoms M&A ise the growing maturity of the UK’s fibre broadband market. The government’s £5 billion Project Gigabit strategy, initially launched in 2021, sought to deliver gigabit-capable broadband to 85 per cent of UK premises by 2025. A highly ambitious project, given that gigabit coverage stood at just 6 per cent of UK premises in 2019.

This led to the emergence of a plethora of smaller, alternative gigabit broadband providers (altnets) as funding was funnelled into bringing connectivity to harder-to-reach rural areas that major operators hadn’t touched.

In October 2024, it was announced that the goal of 85 per cent coverage had been reached, following a period in which some smaller providers had struggled as network build projects began to dry up.

While Project Gigabit has now moved on to the goal of 99 per cent coverage by 2032, the pace and scale of future builds are likely to be much smaller. As a result, a significant degree of consolidation is expected in the market, with some larger operators such as CityFibre having already completed a number of acquisitions.

Earlier this year, a poll from Neos Networks showed that 96 per cent of UK altnets were considering M&A and/or strategic partnerships with other providers as they seek to survive and secure growth in the increasingly challenging market.

Neos Networks CEO Lee Myall notes: “Altnets have played a pivotal role in reshaping the UK’s connectivity landscape, driving the expansion of full-fibre networks and challenging established incumbents. However, the industry now stands at a crucial crossroads. Heightened competition, financial pressures, and shifting regulatory frameworks mean that Altnets must evolve rapidly to secure their long-term future.”

“Our research highlights that Altnets are exploring a variety of strategies - from mergers and acquisitions to strategic partnerships and service diversification - to strengthening their market position and pave the way for sustainable growth.”

Looking forward
The fact that the TMT sector has established itself as one of the most-active and high-value sectors for M&A so far in 2025 in spite of the significant headwinds that dealmakers face is testament to the strong fundamentals and attractiveness of the sector.

The sector had a particularly challenging start to the year in the UK, where economic and geopolitical uncertainty have slowed investment across a number of industries. But data from Q2 indicates a rebound in investment, as well as growing activity from private equity investors.

Private equity firms becoming more confident in deploying their funds into TMT will be particularly crucial to dealmaking in the sector fully unleashing its potential. Clearly, technology is a key investment focus area for private equity firms, many of which continue to sit on enormous piles of unspent capital.

More broadly, digital advancement (in particular, the rapid development and uptake of AI across virtually the entire TMT industry) all but guarantees that M&A will be an integral feature of the sector for years to come as strategic buyers seek to tap into AI features and investors look to capitalise on the increased profits they can deliver.

When added to the sector’s resilience and incredibly strong underlying fundamentals, rapid technological development across the TMT industry means that the sector offers both the reliable profitability and enormous growth potential that will continue to generate dealmaking, even in the face of persistent headwinds and uncertainty.

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