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    Tech, Media & Telecom Q4 2022

    Q4 2022 Tech Media & Telecom

    Industry Trends

    Technology Spending Expected to Increase in 2023

    According to a recent report by research company Gartner, overall tech spending is forecasted to increase by 5.1% in 2023. Despite declines in consumer spending and layoffs in 2022, technology executives expect to increase spending on cybersecurity and new technologies and maintain or grow their workforce in the new year. In a survey conducted by CNBC, about 74% of executives expect to increase technology spending in the next 12 months, while 22% expect no change.1

    Tech Industry Faces Highest Layoff Since Pandemic

    Technology companies shed more than 150,000 jobs in 2022, nearly doubling the roughly 81,000 tech layoffs in 2020, according to research site www.Layoffs.fyi. The tech layoffs come as the economy is showing signs of cooling while the Federal Reserve continues to hike rates. Consumer and retail experienced the most significant layoffs within the tech sector for a combined 40,000 jobs. Meta and Amazon accounted for roughly half the cuts in consumer and retail.2

    FTC Seeks to Block Microsoft’s $69 Billion Acquisition of Activision Blizzard

    The FTC filed an antitrust lawsuit against Microsoft after alleging the company’s $69 billion planned acquisition of Activision Blizzard would harm competition and suppress competitors of its Xbox gaming console and subscription services. The acquisition, would be Microsoft’s largest deal and make them the third-largest gaming company in the world. Microsoft is also getting pushback from rival Sony, which has lobbied against the deal, claiming the company could completely cut them out from popular gaming series.3

    TikTok Faces Potential Bans in the U.S.

    TikTok, the viral video-sharing platform popular with teens and young adults, is now in hot water. Lawmakers are skeptical of TikTok’s China-based parent company, ByteDance, and their ability to remain independent of the Chinese government. Included in the $1.7 trillion spending bill recently signed into law by President Biden, federal employees will soon be prohibited from using TikTok on government-issued devices. Legislation for a nationwide ban has also been introduced in the Senate and House.4 5

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Twitter, Inc.
    • Undisclosed
    • $48,061.07
    • Zendesk, Inc.
    • Hellman & Friedman LLC; GIC Private Limited; Abu Dhabi Investment Authority; Permira Advisers LLC
    • $10,989.54
    • Switch, Inc.
    • IFM Investors Pty Ltd; DigitalBridge Group, Inc.
    • $10,606.55
    • Avalara, Inc.
    • Vista Equity Partners Management, LLC
    • $9,831.35
    • Incumbent Local Exchange Carrier Business in 20 States of Lumen Technologies, Inc.
    • Connect Holding LLC
    • $7,100.00
    • Frontline Technologies Group LLC
    • Roper Technologies, Inc.
    • $3,738.00

    Other Financial Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Ping Identity Holding Corp.
    • Thoma Bravo, L.P.
    • $3,006.56
    • BTRS Holdings Inc.
    • EQT Partners Inc.
    • $1,689.80
    • Computer Services, Inc.
    • Centerbridge Partners, L.P.; Bridgeport Partners LLC
    • $1,599.28

    Other Strategic Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • BAMTech, LLC
    • The Walt Disney Company
    • $900.00
    • FWD Media, Inc.
    • KIRKBI A/S
    • $875.00
    • Trader Interactive, LLC
    • carsales.com Ltd 
    • $809.00
    • ChannelAdvisor Corporation
    • Commerce Technologies, LLC
    • $732.72
    • TaxACT Holdings, Inc.
    • DS Admiral Bidco, LLC
    • $720.00

     

    Source S&P Capital IQ as of 1/10/2023 and PCE Proprietary Data

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    Data Assumptions

    This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

    Glossary

    EBIT - Earnings Before Interest and Taxes
    EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
    LTM - Last Twelve Months
    TEV - Total Enterprise Value

    Sources:

    1. Thomas, Ian. "Technology executives signal spending in 2023 even as the sector goes through massive layoffs." CNBC, 15 December 2022.
    2. Barnett, Andrew & Li, Ming. "Tech Layoffs Are Happening Faster Than at Any Time During the Pandemic." The Wall Street Journal, 3 January 2023.
    3. Howley, Daniel & Keenan, Alexis "FTC files antitrust lawsuit to block Microsoft's $69 billion Activision Blizzard deal." Yahoo Finance, 8 December 2022.
    4. Paz, Christian. "A TikTok ban in the US mean a Gen Z reckoning for politicians." Vox, 24 December 2022
    5. Smith, Ian. "Federal Employees Are Now Banned From Using TikTok." FedSmith, 3 January 2023

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