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Joe Anto

E: janto@pcecompanies.com

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Industry Trends

Cisco's Acquisition of Splunk Reshapes the Tech Landscape

Cisco's acquisition of Splunk for $28 billion underscores a significant transformation in the Tech Media & Telecom sector, positioning Cisco as a major software powerhouse. This deal enhances Cisco's integrated offerings in security, observability, and AI, driving the evolution of technology and M&A landscapes. It signifies a strategic pivot towards data-driven solutions, promising revolutionary impacts on organizational connectivity and security.1

U.S. House Advances Bill Threatening TikTok Ban

The U.S. House recently approved a bill (352-65 vote) that may lead to a TikTok ban unless ByteDance, its Chinese parent company, sells its share, addressing national security concerns. With over 170 million U.S. users, TikTok's potential data exposure to the Chinese government has intensified oversight of foreign tech entities. This development marks a pivotal change in U.S. tech policy, reflecting the intricate interplay between national security and the worldwide tech media and telecom landscape.2

The Year of Enacting Comprehensive AI Regulation

In 2024, AI regulation is set to advance significantly, with the implementation of comprehensive laws aimed at holding tech companies accountable globally. The United States will see the enactment of policies from President Biden's executive order, focusing on transparency and sector-specific standards, alongside the potential for new legislation. This shift towards concrete regulatory actions reflects a growing recognition of AI's societal impact, influenced by major developments in 2023 and the upcoming presidential election.3

Generative AI, Sustainability, and Streaming Boost M&A Activity

Deloitte’s 2024 outlook for the technology, media, and telecom (TMT) sector highlights key trends: generative AI chip sales could exceed $50 billion, and sustainability initiatives in telecom and semiconductor industries are advancing. In the streaming realm, the shift is towards profitability through varied subscription models. These developments will likely spur M&A in the TMT industry as companies strive to adapt and capitalize on these emerging trends.4

Focus on Fiber, Enterprise Services, and Data Centers

The TMT sector's M&A focus is expected to intensify in fiber networks and enterprise services, with data centers emerging as a key segment due to surging data demand and technological advances. The trend of significant acquisitions, like Brookfield's $5.7 billion purchase of Compass Datacenters, emphasizes an increased interest in these subsectors. This dynamic points to a strategic shift in the TMT M&A landscape, where targeted consolidation and investment in high-demand areas are paramount.5

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Splunk Inc.
  • Cisco Systems, Inc.
  • $30,998.87
  • Alteryx, Inc.
  • Insight Venture Management, LLC; Clearlake Capital Group, L.P.
  • $5,027.93
  • EngageSmart, Inc.
  • Vista Equity Partners Management, LLC
  • $2,538.07
  • ETF Flows LLC
  • TMX Group Limited
  • $948.00
  • Flywheel Digital LLC
  • Omnicom Group Inc.
  • $900.00
  • Parchment LLC
  • Instructure, Inc.
  • $835.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Trustwave Holdings, Inc.
  • The Chertoff Group, Investment Arm
  • $205.00
  • RSR Partners LLC
  • Iron Mountain Incorporated
  • $200.00
  • Startek, Inc.
  • Capital Square Partners Pte Ltd
  • $74.59

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Substantially All Assets of Cyxtera Technologies, Inc.
  • Dawn Acquisitions LLC
  • $775.00
  • Zero-Carbon Data Center Campus
  • Amazon Web Services, Inc.
  • $650.00
  • Corvus Insurance Holdings, Inc.
  • The Travelers Companies, Inc.
  • $435.00
  • Thirdera, LLC
  • Cognizant Technology Solutions Corporation
  • $430.00
  • Spiff, Inc.
  • Salesforce, Inc.
  • $374.00

 

Source S&P Capital IQ as of 4/15/2024 and PCE Proprietary Data

PCE Transactions

Contacts

Joe Anto

New York Office

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Eric Zaleski

Chicago Office

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Jon Gogolak

Orlando Office

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. Cisco Systems, Inc. “Cisco Completes Acquisition of Splunk.” PR Newswire, 18 March, 2024.
  2. 2. Freking, K. “House passes a bill that could lead to a TikTok ban if Chinese owner refuses to sell.” Associated Press, 13 March, 2024.
  3. 3. Ryan-Mosley, T. “What’s next for AI regulation in 2024?” MIT Technology Review, 5 January, 2024.
  4. 4. Stephen, L. “Deloitte Technology, Media & Telecom 2024 Predictions.” Deloitte, 29 November, 2024.
  5. 5. Fidler, T. “M&A in Telecommunications: Making the Right Selective Bets in a Tough Environment.” Bain & Company, 30 January, 2024.
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