TMC M&A Trends: Resilience, Scalability and Discipline Will Define Success
Deal sentiment across tech, media and communications (TMC) entered 2025 on a strong footing, buoyed by momentum built in the post-COVID rebound. After the sharp contraction in the first half of 2020, transactional activity rebounded dramatically through 2021 and 2022, with deal volumes and valuations reaching record highs. By 2023 and into 2024, however, the market had steadied. While deal activity remained healthy, growth rates normalised, and the energy that fuelled earlier years began to temper. Risk sensitivity gradually rose, particularly around deal structuring and operational resilience.
As 2024 drew to a close, there was cautious optimism that this stable environment would continue. Many investors anticipated another year of steady, if selective, transactional flow across TMC sectors.
Instead, the first quarter of 2025 delivered a sharp recalibration. Early shocks – including tariff announcements, stock market volatility and renewed geopolitical tensions – caught many parties off guard, disrupting deal processes and forcing a reassessment of risk appetite.
What is emerging is not a retreat, but a refocus. Buyers remain active, but investment priorities have tightened around businesses that demonstrate operational rigour, digital scalability and sector durability – qualities that are increasingly critical to sustaining capital interest in a more volatile market.
Flight to Quality and Safety
The market’s reaction to the volatility of early 2025 is not a sudden shift, but an intensification of investment logic that had already been emerging through 2024. Understanding how deal dynamics evolved last year is critical to anticipating how trends are likely to sharpen through 2025 and beyond.
While TMC deal activity remained healthy throughout 2024, underlying market sentiment was already beginning to shift. Inflationary pressures, rising commodity prices, international conflicts and an evolving, less predictable regulatory environment all contributed to growing caution among buyers. Although transactional momentum remained steady – particularly across pan-European deals and cross-border activity from US-based investors – enthusiasm was clearly tempering compared with the sharp rebound seen in 2021 and 2022.
This caution was reflected in deal structures. Parties increasingly turned to completion account structures to ascertain price, rather than locked box mechanisms. Valuation gaps between buyers and sellers became more visible, prompting wider use of deferred consideration and earn-outs to bridge expectations. Investors increasingly sought mechanisms to align deal pricing with future operational performance.
Distressed M&A activity also began to rise, as businesses under pressure from macroeconomic headwinds sought strategic exits or cost rationalisation opportunities. Even as appetite for quality assets remained strong, buyers were becoming more selective, placing greater emphasis on verifiable fundamentals and structural resilience rather than speculative growth narratives.
By late 2024, this shift was playing out in real time: businesses offering transparent operations, strong market positioning and scalable infrastructure were progressing more smoothly through due diligence and sustaining stronger buyer interest. Businesses with harder-to-price risks, by contrast, faced longer processes, greater scrutiny and valuation pressure.
The disruption that followed in early 2025 accelerated and sharpened this cautious dynamic. Investment committees and boards that had already been tightening their filters in 2024 have moved into risk recalibration mode, further elevating structural resilience and operational clarity as prerequisites for transacting.
In today’s selective market, digital maturity, operational control and scalable business models are no longer just competitive advantages. They are increasingly decisive factors in shaping buyer confidence, pricing outcomes and execution certainty.
Why Structure Matters Now
The current caution in the M&A environment means that deal structure has moved to the centre of negotiation strategy. As volatility and valuation uncertainty widen pricing gaps, mechanisms such as earn-outs, deferred consideration, staged acquisitions (majorities or even minorities) and carve-out structures are playing a critical role in bridging expectations between buyers and sellers.
These tools offer flexibility, enabling parties to align deal value more closely with future performance while managing immediate risk exposure. What was once treated as a backend execution detail is now a frontline tactic for getting deals done. In a market defined by selectivity and recalibrated risk appetite, the ability to structure creatively is often the difference between momentum and standstill.
Where Capital is Flowing
While sector focus still plays a role in drawing initial buyer interest, it is no longer solely determinative. Investors are no longer satisfied with sector exposure alone – they are scrutinising how businesses can convert strategic advantage into sustainable growth under pressure. This is especially true in TMC, including areas such as cyber security and technology-enhanced defence solutions, where longstanding advantages such as digital infrastructure, creative ecosystems and strong IP foundations still offer meaningful appeal.
Recent transactions highlight the strategic traits that are drawing capital interest and offer valuable signals of how investment priorities are likely to evolve through 2025 and into 2026.
Scalable Digital Platforms
Content-driven platforms with strong digital distribution models continue to attract sustained buyer interest, particularly where monetisation is tied to user engagement or proprietary ecosystems.
The sale of Fusebox Games to India’s Nazara Technologies illustrates this strategic logic: a narrative-led mobile games developer and publisher built around repeatable, scalable revenue and strong digital community engagement. Businesses with embedded monetisation mechanics offer durable value, even when broader market conditions shift.
These businesses appeal for being able to engage users directly, reduce acquisition costs and generate recurring revenue with minimal marginal cost, aligning well with both strategic and financial investor priorities in volatile markets.
Creative Brand Platforms
Brand authenticity and defensible client relationships are gaining renewed importance as AI-driven disruption accelerates. Buyers are rewarding firms that sustain differentiation through creativity, client relationships and proven growth.
Uncommon’s acquisition by Havas – partly positioned as a hedge against the commoditising effects of generative AI – and New Commercial Arts’ acquisition by WPP highlight the trend: both firms achieved rapid growth after their founding, combining creative leadership with strong commercial execution. These businesses’ creative distinctiveness has allowed them to retain pricing power in sectors where automation and generative content risk flattening differentiation.
For investors, creative resilience is not just about brand image – it signals deeper commercial defensibility. Businesses that protect pricing, preserve client loyalty and maintain a clear market identity amid commoditisation are more likely to justify premium multiples, particularly when earnings quality and long-term differentiation are under scrutiny. In a market where AI is levelling functional capabilities, the value now lies in what cannot be easily replicated.
Data-Driven and AI-Enabled Models
Proprietary datasets and technical AI capabilities are playing an increasingly decisive role in due diligence and valuation. Investors are gravitating towards businesses where data ownership, regulatory positioning or analytics engines create defensible moats. Across media, diagnostics and regulatory technology, data and AI are recognised not just as growth drivers, but as valuation protectors – critical assets likely to command premium multiples even in volatile conditions.
Buyers are now looking beyond whether AI is present in a business model, they are assessing how it is deployed and what risks or advantages it creates. Ownership of proprietary datasets, the ability to explain and validate model outputs, and clear alignment with evolving regulatory standards are becoming key differentiators. In a market where regulatory pressure and heightened investor expectations around AI are shaping deal decisions, businesses that demonstrate control and transparency are gaining a clear edge.
Energy Tech and Strategic Innovation
In energy technology, investor focus is shifting to capital-light innovation – such as optimisation software, usage analytics and predictive control systems – that supports efficiency and aligns with policy objectives without the capex exposure of infrastructure assets.
By contrast, investment appetite in autotech, particularly in EV-linked sectors, has softened in the near term. Tariff uncertainty and easing consumer demand have tempered short-term momentum, although next-generation mobility remains a longer-term opportunity.
Across both areas, buyers are favouring innovation that strengthens operational defensibility, not just expansion potential.
Scaled Operators with Strategic Growth Momentum
Mid-sized platforms demonstrating operational control, cross-border scalability and disciplined buy-and-build execution continue to command strong interest from private equity and debt investors.
Focus Group provides a clear example: we advised on its 2020 private equity transaction and again on its 2024 secondary deal, which saw the business’ value climb significantly. (See case study: Focus Group: Building Scale, Securing Value) Its combination of organic expansion and strategic acquisitions created operational maturity and scale – attributes that are becoming critical differentiators in a more selective market.
In 2025, being able to integrate acquisitions cleanly and scale without repeated capital injections has become a key differentiator, particularly for sponsors looking to de-risk portfolios without slowing growth.
Healthcare and IT services platforms are seeing similar renewed interest, particularly where businesses can demonstrate disciplined integration and resilient fundamentals.
Focus Group:
Building Scale, Securing Value
Focus Group’s trajectory offers a clear example of how operational discipline and strategic growth can position mid-market businesses for large-cap investor interest, even amid volatile conditions.
In 2020, the business completed a private equity transaction with Bowmark Capital just days before the first COVID-19 lockdown reshaped the global economy. Over the following four years, Focus pursued a disciplined growth strategy, combining strong organic expansion with targeted strategic acquisitions. This approach built significant operational scale, strengthened integration capabilities and broadened its geographic reach across the UK and beyond.
By 2024, Focus’ operational maturity and strategic clarity had attracted significant investor interest, culminating in a secondary transaction with Hg Capital that valued the business at circa US$1 billion. The Focus Group transaction offers a window into the market dynamics already taking shape in 2024. The traits that attracted investor interest then are becoming even more critical as buyer selectivity sharpens through 2025 and beyond.
Transacting in a More Selective Market
This is not a lost year for TMC dealmaking, but it is a more discerning one. Volatility will continue shaping the landscape into 2026, and not all businesses will find easy pathways to transact.
Yet meaningful deal activity is happening where fundamentals align. Buyers are committing where they see credible growth, operational clarity and structural resilience. The best-positioned businesses will not only navigate near-term volatility – they will validate their value in ways investors can test and trust.
Looking ahead, the scalability, defensibility and disciplined growth traits will likely become even more decisive filters for investment. In a more selective market, the question is no longer whether deals can be done, it is whether you are the kind of business that investors or strategic buyers will back.
Contributors
We would like to thank these individuals for having shared their insight and experience on this topic.
