Tech, Media & Telecom Q1 2025

Executive Summary

M&A activity in the TMT sector showed a steady recovery in Q1 2025, with 2,141 closed deals over the last twelve months up from 1,887 in Q1 2024, though still below the Q1 2022 peak. Strategic buyers accounted for 91% of activity, highlighting continued consolidation in cloud, media, and telecom infrastructure. Financial sponsors also returned, pursuing growth in AI, cybersecurity, and enterprise software through flexible deal structures. Median valuation multiples continued their correction, with TEV/EBITDA at 14.20x and TEV/Revenue at 2.47x, reflecting a market recalibration toward sustainable earnings. Below, we analyze key drivers and trends shaping the sector.

Market Dynamics

Transaction volume in the TMT sector showed early signs of recovery, rising 13% YoY to 2,141 closed deals after a low point in 2024. While still below peak 2022 levels, the increase suggests cautious optimism amid persistent macroeconomic uncertainty and elevated interest rates. Valuation multiples remained under pressure, with median TEV/EBITDA declining to 14.20x and TEV/Revenue falling 9% YoY (2.47x vs. 2.74x in Q1 2024), as buyers prioritized profitability and recurring revenue over top-line growth.

Buyer Landscape

Strategic Acquirers: Drove 1,911 transactions (91% of total), targeting software, AI integration, and telecom infrastructure—highlighted by IBM’s $7.7B HashiCorp and Siemens’ $10.7B Altair acquisitions.

Financial Buyers: Private equity firms participated in 191 deals (9% of total), pursuing investments in scalable platforms and enterprise software. The $8.0B Smartsheet acquisition by Vista Equity and Blackstone reflecting sustained interest in scalable, recurring revenue tech platforms.

Industry Comparison

The TMT sector gained momentum in Q1 2025, with transaction volume climbing to 2,141 deals up from 1,887 the prior year representing 15.6% of all transactions reflecting renewed investor confidence amid stabilizing economic conditions. Valuation multiples adjusted moderately, with TEV/EBITDA at 14.20x and TEV/Revenue at 2.47x, signaling continued interest in scalable, tech-enabled assets while maintaining focus on profitability and sustainable growth.

Geographic Expansion

Top U.S. States: California (393 deals), New York (190), and Texas (144) led U.S. M&A activity, reinforcing their status as key TMT hubs.

Regional Trends: The Southeast, led by Florida (101 deals) and Georgia (52), saw rising M&A activity, signaling growing interest in the region. Favorable business conditions and expanding tech talent are making it an emerging TMT hub.

Notable Transactions

Largest Transactions Closed

Other Strategic Buyer Transactions Closed

Other Financial Buyer Transactions Closed

Emerging Trends

Key trends shaping Tech, Media and Telecom M&A:

1. Software Deals and Creative Partnerships
   McKinsey highlights that the technology subsector will continue to drive most deals in 2025, with companies and investors focusing on software and creative partnerships.
2. Industry Catalyst
   PwC reports that three key trends—growth and transformation focus, AI as a catalyst, and private equity pressures—are intensifying, leading to increased M&A activity in 2025.
3. Recurring Revenue Premiums
   Valuations remain favorable for companies with recurring revenue models. These businesses are often perceived as lower-risk and more scalable, commanding stronger EBITDA multiples than project-based peers.
4. Portfolio Reshaping & Strategic Alliances
   Major primes and suppliers are divesting non-core units and forming joint ventures to align with evolving procurement trends.^{5 7}
5. Subsector Spotlight: Software and Cybersecurity
   Valuations in the software and cybersecurity sectors remain robust, with EBITDA multiples for cybersecurity companies reaching up to 12.5x for firms with $5–10 million in EBITDA. This strength is driven by sustained demand for AI integration, data security solutions, and scalable SaaS platforms.
6. Subsector Spotlight: Gaming
   The gaming industry saw a significant surge in M&A activity in Q1 2025, with total deal value reaching $6.6 billion the highest in over a year. The mobile gaming segment continues to attract substantial investment due to its strong growth and profitability.

Outlook for Next Quarter

Opportunities: The surge in AI and ESG compliance demands is driving TMT firms to pursue acquisitions that enhance operational efficiency and meet evolving regulatory standards. Companies seek to integrate generative AI capabilities and strengthen their ESG advisory services to stay competitive in a rapidly transforming market.

Risks: Persistent wage inflation and rising labor costs are exerting pressure on TMT companies, especially those in labor-intensive segments like telecommunications infrastructure and media production.

Predicted Activity: A steady increase in private equity-driven divestitures and carve-outs is anticipated in Q2, as firms respond to high interest rates and focus on optimizing their portfolios.

PCE Transactions

Served as advisor to SkyCross on their fairness opinion

Served as advisor to Communications International, Inc. on their acquisition of Fatpot Technologies

Served as advisor to LMG Inc. on their acquisition of Premier Event Technology

Served as advisor to Arete Development, Inc. on their acquisition by Glotel, a portfolio company of The Gores Group

Served as advisor to Level 10 on their sale to Level 10 ESOP Trust

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