Cross-industry M&A boom ‘set to continue’

Most technology, media and entertainment (TME) companies expect the current boom in cross-industry mergers and acquisitions to continue, a study reveals.

Eight-four per cent of TME firms expect to see more cross-sector mergers and acquisitions over the next two years.

The Wired up: The Convergence of Technology, Media and Entertainment report revealed entertainment businesses – which include TV production, broadcast and distribution firms – were most willing to merge with companies from other industries.

Thirty-three per cent said they were planning on non-entertainment purchases, though Reed Smith warned this was a risky though potentially lucrative strategy.

Global law firm Reed Smith, in partnership with Mergermarket, tallied the responses of more than 100 senior level corporates executives, and these showed an increasingly competitive M&A market for TME firms.

Convergent deals amounted to US$34.5 billion in total, and this figure is expected to increase in the future.

“One major challenge for cross-sector acquirers is understanding a new area of business,” said Gregor Pryor, Reed Smith partner and co-chair of the firm’s global entertainment and media industry group. “This can be a steep learning curve.

“If you are a big tech company, the biggest challenge is just understanding the space. Film doesn’t operate in the same way as music or the same way as computer games. Companies need to learn about a new sector.”

The report also showed 57% of TME companies expected their next acquisition to be made abroad, with 37% highlight Asia Pacific as their most likely target. Western Europe (23%) and North America (17%) followed.