Swiss M&A trends in technology, media and telecom

In 2024, global TMT deal volumes dropped 27% compared to 2023. However, in early 2024 signs of recovery emerged, particularly in the technology sector, with larger deals driving growth. We expect this momentum to continue in 2025, supported by potential deregulation in the US, interest rate cuts, and rising confidence among executives. Key drivers for an increase in both M&A volumes and values include the adoption of AI, the rivalry between new and traditional media, and ongoing restructuring in the telecoms sector.

Technology continues to lead TMT deal activity, accounting for 83% of TMT deal volume and 75% of deal value in 2024. Despite a 29% decline in deal volume, deal value increased by 33%, signalling a shift towards larger transactions. The software subsector was the largest contributor, representing 65% of technology deal value. While software deal volume fell by 33%, deal value rose by 38%, from $229bn in 2023 to $316bn in 2024, driven by AI growth, lower interest rates, and a recovering stock market.

The global surge in interest in AI is driving significant capital investment, potentially diverting funds from other areas, but opening up new opportunities for market share growth through strategic acquisitions, particularly further down the value chain.

Corporate and private investors are investing heavily in AI, with the US attracting the largest share, including a $500bn joint venture between OpenAI, Oracle, and SoftBank to develop data centres. Companies are focusing on high-growth segments such as data analytics, automation, and generative AI. Major deals include Cisco’s $28bn acquisition of Splunk, and HPE’s $14bn purchase of Juniper Networks to boost its AI networking capabilities.

The expansion of AI requires increased data centre capacity, driving M&A activity in the sector. Private equity (PE) investments such as DigitalBridge’s and Silver Lake’s $9.2bn investment in Vantage Data Centers reflect growing interest. With a projected five-year CAGR of 28.3% in data centre capacity, deals such as Blackstone’s $16bn acquisition of AirTrunk signal future growth. High energy consumption has also spurred investment in sustainable energy, including Google’s partnership with Kairos Power and Amazon’s $650m acquisition of Talen’s nuclear-powered data centre. While AI-driven investment may temporarily reduce overall M&A activity, deregulation and other factors are likely to sustain dealmaking momentum in 2025.

Big tech’s growing capital investment needs 

Major tech companies such as Amazon, Meta, Google, and Microsoft are significantly increasing their capital spending to meet growing AI-related demands. For example, Microsoft’s Azure-driven spending jumped 79% year-on-year in the third quarter of 2024, while Meta saw a 36% increase. Despite these investments, supply chain constraints are limiting the expansion of AI data centres. This shift could fundamentally alter the high-margin, low-capital business model traditionally associated with software companies, as infrastructure spending becomes essential to remain competitive.

Geopolitical shifts could boost M&A 

Regulatory changes under the Trump administration in the US could reshape M&A activity, particularly in the TMT sector. Potential deregulation by the FCC and a less aggressive antitrust stance by the FTC may encourage dealmaking. However, new tariffs or trade restrictions will have a global impact, making the regulatory landscape more complex and sector-specific.

Interest rate cuts boost deal activity 

With central banks such as the US Federal Reserve, the ECB, and the Bank of England expected to cut interest rates in 2025, the cost of capital will fall, making M&A more attractive. Financial sponsors, particularly private equity, are poised to increase their share of TMT deals, reversing the recent dominance of corporate buyers on a global level. High-profile deals such as Blackstone’s $16 billion acquisition of AirTrunk and the proposed $13bn acquisition of Adevinta signal a resurgence in PE activity. As interest rates fall, TMT assets previously acquired at high valuations during the pandemic may now offer more favourable exit opportunities.

In 2024, global TMT deal volumes were 27% lower than in 2023. However, in early 2024, deal values began to recover across all sectors, with several large deals being announced.  The TMT sector recorded 26 megadeals (deals worth more than $5bn) in 2024, more than double the 11 megadeals recorded in 2023. Technology accounted for 83% and 75% of TMT deal volume and value, respectively.

Regionally, deal volumes declined in Asia Pacific, EMEA, and the Americas in 2024, although each region retained around a third of global TMT deal volume. In terms of deal values, the Americas saw a 46% increase from 2023 to 2024, while Asia Pacific witnessed a 44% increase. In contrast, EMEA saw a 4% decline in TMT deal value over the same period.

While M&A activity in the Swiss TMT industry defied the global slowdown in early 2023 – recording record-breaking transaction volumes – deal activity saw a steady decline from Q2’23 through Q2’24. However, a slight rebound in Q3’24 signalled renewed investor interest, before stabilising at Q2’24 levels by the end of the year. As a result, the Swiss market experienced a –25 percent year-on-year reduction in TMT-related M&A activity in 2024 (versus –23 percent globally).

After a strong start in Q1’24, deal volumes slowed significantly in the second half of the year, with Q3’24 and Q4’24 reflecting cautious investor sentiment and ongoing macroeconomic challenges. Impacted by continued global uncertainty, higher financing costs, and a persistent gap in price expectations between sellers and investors, M&A activity involving Swiss TMT companies declined in 2024 compared to the previous year. Despite the slowdown, technology remained the dominant sector, while media and entertainment continued to contribute lower deal volumes. Over the past 12 months, and despite the slowdown, the Swiss market still saw 136 completed transactions involving TMT targets.

As in prior periods, transactions involving software companies formed the backbone of Swiss TMT M&A deal activity, again accounting for more than two-thirds of all TMT deals, with IT services businesses – the next biggest driver – accounting for 18 percent of transactions. Overall, technology remains king in TMT deals in Switzerland, with about 90 percent of all TMT M&A activity related to technology assets. With valuation levels currently trending below historical averages across TMT sub-sectors, software companies remain attractive M&A candidates, particularly in the cloud, analytics, collaboration, artificial intelligence, and cyber security sectors, supported by stable growth fundamentals, attractive business models, and room for consolidation. As a result, we expect the software space to continue to drive TMT M&A activity in Switzerland in 2025.

With strong underlying fundamentals and continuing the trend of previous years, the Swiss TMT M&A space once again attracted significant interest from private equity and financial investors. In 2024, they accounted for about two-thirds of all transactions – up from just 38 percent in 2020 and well above the global TMT M&A average of 51 percent for the same period (2024). This underscores the TMT industry’s special appeal to financial investors compared to all other sectors in Switzerland, where private equity accounted for only 52 percent of transactions. Given the current level of dry powder held by private equity funds, we expect continued deal activity from this group of buyers in the coming year. 

As in previous periods, non-Swiss buyers continue to play a key role in driving M&A activity in Switzerland, with about 65 percent of all TMT assets acquired by a foreign buyer in 2024. This share that has remained relatively stable over the past quarters and is significantly above all other non-TMT sectors, which on average saw almost equal proportions of targets going to Swiss and non-Swiss acquirers. This continues to highlight the attractiveness of Swiss TMT assets to foreign buyers and the sector’s generally more international perspective compared to other more inward-looking industries. 

Similarly, non-TMT buyers continue to drive the appetite for transactions in the TMT sector, with 73 percent of all transactions completed in Switzerland involving TMT targets in 2024 going to a non-TMT buyer. This compared to all other sectors, where more than two-thirds of all transactions in Switzerland over the same period saw a buyer from the same sector. This trend of sector-foreign buyers in the TMT market has continued to grow in recent years, and given the ongoing need for companies to innovate and drive digitalisation, we expect non-TMT buyers to continue to turn to TMT assets for precisely these reasons.