TMT sector ripe for consolidation, predicts BDO

The current economic climate has created numerous opportunities for the TMT sector (Technology, Media and Telecoms) to undergo extensive consolidation over the next two years, according to new research from accountants and business advisors, BDO LLP. 

As the number of TMT failures looks set to rise to 1,437 by the end of the year (up from 1,111 in 2007), it will create a situation whereby a considerable number of businesses will be available for acquisition at discount prices.

Julian Frost, Head of TMT, at BDO, says: “The current market turmoil will create significant opportunities for those who are able to withstand the effects; therefore, we should expect to see significant levels of consolidation in the TMT sector during 2009 and 2010.”

“Those players who are presently more dominant in the market look set to become even stronger as a result of consolidation across the sector,” continues Frost.

Given the difficulty of securing lending from banks, those companies with significant cash on their balance sheets will be amongst the first to seek growth, through bolt on acquisitions, compared to their competitors.

TMT sector more resilient

The TMT sector has also emerged as one of the more resilient areas of the UK, providing positive news amongst the economic doom and gloom.

“In comparison to the construction industry, business services and real estate companies, all of which will have seen between 3,000 and 5,000 business failures this year, TMT businesses have remained relatively unscathed,” continues Frost.

“We are not suggesting that 2009 will be a walk in the park for the TMT sector.  Merely that for those who choose to seize the moment, bolt on acquisitions will provide a way forward,” he concludes.

ENDS

For more information, please email Dee Crooks at BDO, or telephone: 020 7893 2761/07815 172 051

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