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Shaw & Co Launches Technology, Media & Telecoms (TMT) Sector Report

Shaw & Co, the specialist corporate finance advisory firm, has launched the latest of its in-depth sector reports that offers business leaders a powerful sector overview and benchmarking tool to aid decision-making and assist in their investment planning. 

 

The report covers the Technology, Media & Telecoms (TMT) industry and segments 1,874 TMT businesses with earnings of over £1m by size across six sub-sectors – Books, Magazines & Newspapers; Information Technology & Software; Publishing & Printing; Telecom Services & Equipment; TV, Movies & Music; and Radio – to track their performance, profitability, debt levels, borrowing capacity and M&A activity. The report’s key findings include:

 

• Scale: The industry is highly concentrated, with just 8% of the 1,874 companies analysed accounting for 77% of total turnover, but has proven its resilience in the face of the pandemic lockdowns. In a tumultuous year, delivering steady turnover should be considered a good foundation for a return to growth. Organic revenue growth can be developed through product innovation, better online presence, and efficient stocktaking to shore up working capital, which are all fundable options.

• Profitability: Except for the radio sub-sector, companies across all other sub-sectors have seen an increase in average Ebitda margins over the past 12 months which vary from 1%-3%. The industry has been supported through the pandemic by consumers switching to online sales and government furlough schemes. TMT businesses should be aiming to achieve a 16%-20% Ebitda margin. Regardless of company size, companies operating in this sector should expect to deliver gross margins in the range of 45%-51%.

• Borrowing: Over the past 12 months, apart from IT & Software and the Radio sub-sectors, debt levels have stayed the same or reduced. Just over 63% of the total industry debt is carried by the Telecom Services & Equipment subsector. While debt levels have remained broadly similar, the improved earnings profile post pandemic has seen leverage ratios fall, which creates additional debt capacity for many businesses wishing to invest. This puts the industry in a good post-pandemic position, although with the onslaught of energy price inflation and continuing supply chain interruptions, we can expect volatility in sector performance in the coming period.

• Mergers & Acquisitions: 509 M&A deals were delivered during past 12 months, of which 55% were completed by UK buyers. The amount of foreign acquirors is much higher than we have seen in other sectors which shows the attractiveness of the UK TMT industry to all potential buyers

Myles Hamilton, Director – M&A, at Shaw & Co and editor of the report, said: “We are delighted to launch our second annual report into the Technology, Media & Telecoms industry. We hope it will help SME business owners benchmark their own and their peers’ performance in the sector and aid their decision-making processes. Our aim is to provide small business leaders with free access to the same market intelligence as larger blue-chip corporates, which benefit from investment banking advisors. The report will also provide SMEs with valuable insight in terms of their relative creditworthiness and attractiveness from an M&A point of view.”

A full copy of the report is available via https://www.shawcorporatefinance.com/connected/the-shaw-report-technology-media-telecoms-industry-annual-review-october-2022