Despite a decline in overall deal activity within the tech, media, and telecom (TMT) sector, cybersecurity has emerged as a resilient outlier. With escalating cyber threats globally, companies are prioritizing investments in cybersecurity capabilities, leading to a surge in related M&A deals in 2023. This steadfast growth underscores the critical importance of cybersecurity amid evolving threat landscapes and the increasing sophistication of cyber-attacks, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report, “Global Tech, Media, and Telecom (TMT) M&A Deals 2023 – Top Themes and Predictions – Thematic Intelligence,” highlights that the cybersecurity related deals totaled $42 billion in 2023, making it the second largest theme amongst the top 100 deals. The total global TMT M&A deal value fell 46% in 2023 to $403 billion, compared to $745 billion in the previous year. Similar trends were seen in deal volume, which totaled 451 deals in 2023, down 26% from 2022.
GlobalData’s “Tech Sentiment Polls Q4 2023 – Thematic Intelligence,” reveals that 70% of respondents said cybersecurity was either already disrupting their industry or would do so in the next 12 months. States-sponsored attacks are a real threat and ransomware attacks are becoming more sophisticated.
Priya Toppo, Thematic Intelligence Analyst at GlobalData, comments: “With the rise of technologies such as artificial intelligence (AI) and growing geopolitical risks, the volume and sophistication of cyber-attacks has also increased. Acquiring a cybersecurity firm will allow companies to integrate new technologies seamlessly.”
The biggest cybersecurity deal was Cisco’s acquisition of Splunk for $30 billion. This deal was also the biggest in the TMT sector in 2023. This deal was followed by Honeywell’s acquisition of global access solutions business from Carrier Global for $5 billion and Thales’ acquisition of Imperva for $4 billion.
However, TMT M&A activity in 2023 was dominated by connectivity theme driving $72 billion worth of M&A deal value from the top TMT deals announced in 2023. The big connectivity deals were Kohlberg Kravis Roberts (KKR) and Abu Dhabi Investment Authority’s acquisition of Telecom Italia’s (TIM’s) fixed-line business for $20 billion, and Vodafone UK’s merger with Hutchison 3G UK (Three UK) for $19 billion.
Looking more broadly, the report identifies the overall themes that drove M&A in TMT. It also categorizes all major deals announced between 2021 and 2023 into their respective sectors including hardware, software & services, internet & media, and telecom services, with details of the themes driving each deal and sub-categorized into 17 sectors within TMT.
Toppo continues: “A significant amount of M&A deal activity was driven by the application software sector in TMT, accounting for $114 billion for 86 deals. Followed by telecom services, IT services, music, film & TV, and enterprise security software sectors.”
By studying the themes that are currently driving the M&A market, the report also identifies potential future acquisition targets along with their thematic rationale.
Toppo concludes: “Although the TMT sector witnessed a notable shift in M&A dynamics in 2023, marked by a substantial decline in both deal value and volume. The outlook for M&A activity in the rest of 2024 remains subdued, though with inflationary pressures easing and interest rates falling, GlobalData expects a modest recovery over the course of the year. Companies will need to proactively address regulatory concerns and be prepared for potential concessions to secure deal approvals in an environment of increased regulatory scrutiny.”
