Consolidation ramps up in Nordics TMT

We are seeing M&A activity accelerate in the Nordics TMT market, driven by excellent industry fundamentals and strong demand from both Private Equity (PE) funds and listed strategic players. Between 2015 and 2018, the total number of transactions increased by a CAGR of 6.6% – from 311 transactions in 2015 to 377 in 2018, with the high-growth Software and IT Services segments as the noteworthy leaders.

Key insights:
  • Market consolidation is ramping up in the Nordics, supported by deal demand from both listed companies and increasingly PE, who accounted for 29% of all recorded transactions in 2018 – an increase of c. 43% compared to 2017. Mature Software companies are popular targets for PE.
  • There were some headline deals in 2018, including major M&A exits from leading Software and IT consulting players: KMD from Denmark was sold to NEC (EUR1.1bn); iZettle from Sweden to PayPal (EUR1.9bn); and TDC from Denmark to a consortium that included Macquarie, PFA, PKA and ATP (EUR8.4bn).
  • In terms of geography, deal activity is most concentrated in Sweden, where transaction volumes continue to grow and where a large number of TMT businesses are based. Swedish acquirers are also the most active in the Nordics region, followed by international acquirers from the US and the UK.
  • Valuations are typically high in the TMT space, but depend on the segment: ranging between 7x (for Telecom) and 16x (for Software) EV/EBITDA for listed players.
  • There are some significant new serial acquirers: 23 strategic buyers have made at least 5 acquisitions in the region since 2015. These larger groups are using acquisitions to reach new customers and to consolidate what is a fragmented market in Europe.
  • The sector is undergoing fast-cycle evolution and change, which has made M&A an important repositioning tool. Scale is another important catalyst for deals, as is the attractive growth story in Nordics TMT (esp. Software).

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