Cybersecurity is expected to be the biggest challenge and opportunity facing technology, media and telecommunication (TMT) mergers and acquisitions professionals (M&A) in 2022, according to new research by Datasite.
The SaaS-based technology provider for global dealmakers surveyed 200 senior UK M&A professionals comprised of CEOs to corporate development, banking, consulting, accounting, private equity and legal professionals.
More than half of UK CEOs (54 per cent) and 46 per cent of senior M&A professionals surveyed said that cybersecurity presents the best opportunity for TMT dealmaking over the next year, ahead of other sub-sectors, such as cloud technology and data analytics, of which 44 per cent said were the next best targets.
Yet at the same time, CEOs said cybersecurity is also one of the most difficult areas to manage when it comes to executing deals and integrating assets, post-acquisition. More than a third (37 per cent) of CEOs believe cybersecurity and the ability of staff to work in a virtual environment were the biggest challenges when executing TMT deals virtually, followed by regulatory approvals (17 per cent). One in three (33 per cent) of CEOs also said implementing technology into their existing operations is the biggest challenge when managing the integration phase of a TMT deal in a purely virtual environment. This was ahead of operating models (29 per cent) and communicating strategy to employees (29 per cent).
Still, not everyone involved in the M&A ecosystem agrees on cybersecurity being the most attractive sub-sector. While respondents from UK law firms (49 per cent) and investment banks (46 per cent) agree cybersecurity presents the best TMT dealmaking opportunities this year, corporates overwhelmingly (64 per cent) picked cloud tech, while 57 per cent in consulting and accounting firms selected data analytics and 47 per cent in private equity (PE) firms chose e-commerce as the most attractive sub-sectors.
M&A professionals also said several factors could interfere with TMT dealmaking this year. Over one-third of UK senior M&A professionals (36 per cent) expect slow economic recovery to hinder TMT M&A activity, a sentiment reflected by over half (54 per cent) of CEOs. M&A professionals also said supply chain issues (31 per cent) and overvaluations could be deal-making impediments (29 per cent).