Nordics TMT Market Update 2020

Another active period in the TMT deal space

The M&A market in the Technology, Media and Telecom (TMT) sector in the Nordics continues to be driven by consolidation across all market segments – buy-and-build strategies had surged as PE investors continue to deploy capital in the Technology sector. Between 2018 and 2019, the total number of transactions marginally decreased by 6.4% – amounting to 353 transactions in 2019 from 377 in 2018. Software deals continued to be predominant and the IT Services segment had a slight decline in deal count in 2019.

Key insights:
  • Significant M&A activity in 2019 and beginning of 2020 in the Nordics, supported by deal demand from both listed companies and more increasingly from Private Equity buyers, who accounted for 29% of all recorded transactions in 2019
  • Headline deals in 2019, includes leading Software and IT consulting players: EVRY from Norway was sold to Tieto (EUR1.3bn); Acando from Sweden was bought out from the stock exchange by CGI (EUR0.4bn); and EG from Denmark was sold to Francisco Partners (EUR0.5bn)
  • In terms of geography, deal activity is most concentrated in Sweden, where transaction volumes were on par with last year. Interestingly we are seeing higher activity in the Software space in Norway with a total of 47 deals, many of them represents platform investments. Swedish acquirers are still the most active in the Nordics region, followed by non-Nordic acquirers from the US and the UK.
  • Valuations are still trading above four years long-term average in the TMT space but depend on the segment: ranging between 8x (for IT Services) and 13x (for Software) in EBITDA for listed players.
  • Overall outlook in the Nordics TMT sector remains healthy despite continued uncertainty due to the effects of COVID-19. The Nordics TMT indexes has seen a significant turmoil, despite the most recent rebound and is now back at 6 months prior levels.
  • As consolidation continues there has been a large amount of buy-and-build journeys supported by Private Equity firms, essentially leading to several rebranding’s in the market. To keep track of the brands’ updates, please read more in the report.

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For enquiries, please contact: erik.dahl@capitalmind.com

Erik Dahl
Erik Dahl
Partner
Nordics

"As predicted last year, the PE sponsored deals outnumbered the strategic private and public buyers, as PE firms continued to deploy capital in the Tech space. In 2019, the IT consulting sector was more than usual transformative due to several mega transactions. Going forward, there will be plenty of M&A opportunities as technology and the COVID-19 pandemic reshapes the economy"