StrategyEye's TMT dealflow sweet spots report for Q1 2008 provides an economic deal analysis of transaction information processed by StrategyEye's proprietary technology platform and selected for coverage by StrategyEye's editorial team. It captures all key TMT M&A and VC dealflow values and volumes across key geographic regions and sectors for Q1 2008. The report covers all global M&A and VC deals in Q1 2008 captured by StrategyEye's content intelligence, including the following 12 core TMT sector categories: advertising, broadcasting and channels, enterprise, games, mobile applications and portals, music publishers, search, social networks, telcos, video, and web applications and services. However, only half of these 12 core sectors drove dealflow activity and, therefore, form the basic parameter of StrategyEye.s analysis, and provide an in-depth insight into geographic differences and dealflow activity for the following six core sectors: Advertising; Broadcasters and channels; Social networks; Telcos; Video; Web applications

Executive summary:

• According to StrategyEye's proprietary dealflow intelligence, M&A deal activity and consolidation across all core TMT sectors increased in comparison to the previous quarter, both in terms of transaction volume and value. StrategyEye's data shows a significant increase in consolidation across all sectors. This appears to be more accentuated than normal seasonal changes would suggest and may be a possible prelude to prolonged consolidation in the overall TMT market in 2008, particularly across the telecom and broadcasting sectors.
• Overall, the market is increasingly driven by larger deals, with core transactions estimated to be more than USD97bn in Q1 2008, compared to USD50bn in Q4 2007.
• However, while venture capital investments in Q1 2008 did increase in comparison to the previous quarter - with particularly stronger investments in social networks and to a lesser extent, advertising - there was a slower overall growth than in M&A transactions.
• There is a reverse market trend in terms of global VCs growing taste for high-risk transactions, which is similar to the behaviour of early web 2.0 investors.
• Overall, the VC market is increasingly driven by social network and web application deals, with transactions in these spaces estimated to be more than USD4.8bn compared to USD3.8bn in the previous quarter.
• Regionally, the geographic split for deals and transaction volume is remarkably different, with the American deal split across key sectors much more diversified than Europe and the Asia Pacific region, where, broadly speaking, only broadcasters and channels and telcos drive the M&A activity.
• In terms of VC investments, Europe and the Asia Pacific region are slightly more diversified in terms of sectors and volume, with UK companies leading, followed by Germany and Spain.
• Two trends are appearing in terms of VC investment: 1) Venture capital continues to flow strongly towards later-stage, mega and/or multiple party deals 2) The resurgence in investment in the web applications and services sector is manifesting itself in a larger number of smaller deals.
• The direct influence of US VCs into EMEA startups is slow, but there is an indirect capital influx on European VC's positioning and decision making. According to StrategyEye's data for Q1 2008, American VCs represent the top five global VCs by deal number, but investors in EMEA - in particular emerging sources of capital in Dubai - appear to have adopted American-style investment patterns. They are expected to increase both in their activity and impact on the TMT core sectors over the short term.
• Looking forward to 2008 StrategyEye is cautiously optimistic, believing there will be a continuing consolidation of M&A activity and a flattening out of VC investments, rather than a fall in overall investors' activity for 2008. However, if macro uncertainties continue to escalate, there may be a u-turn in both IPO and M&A activity, with mid-stage web 2.0 businesses particularly exposed as funding for startups could be hit.

Table of contents

1. Executive Summary

2. TMT Dealflow Sweet Spots: Q1 2008

• Methodology and approach
• Regions covered
• The big picture: Dealflow sweet spots for Q1 2008
• World view - M&A sector analysis
• World view VC sector analysis

3. Regional view: Geographical sector analysis

• EMEA
• Americas
• Asia Pacific

4. Investor activity

• Top 10 global TMT investors
• Top five global TMT VCs

5. Key deals: In-depth insight into key q1 2008 transactions

• AOL-Bebo deal - the year of social media moguls
• Google-Double Click - another blow for Microsoft
• Hellman Friedman-Getty Image deal - Getty in transition
• Saudi Telecom-Oger Telecom - the Saudi Telecom shopping spree
• News Corp-Premiere AG - Why News Corp is expanding into Germany

6. In conclusion: Future dealflow outlook

• Looking ahead: M&A and VC dealflow activity

Table of figures

• Figure 2: Top VC activity areas for Q1 2008
• Figure 3: EMEA M&A deal breakdown by value and volume activity
• Figure 4: EMEA VC deal breakdown by value and volume activity
• Figure 5: Americas M&A deal breakdown by value and volume activity
• Figure 6: Americas VC breakdown by value and volume activity
• Figure 7: Asia Pacific M&A deal breakdown by value and volume activity
• Figure 8: Asia Pacific VC deal breakdown by value and volume activity

List of tables

• Table 1: M&A dealflow activity by top sectors: Q1 2008 vs. Q4 2007
• Table 2: VC dealflow activity by top sectors: Q1 2008 vs. Q4 2007
• Table 3: Top 10 Global TMT M&A Investors Q1 2008
• Table 4: Top 5 Global TMT VC Investors Q1 2008

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