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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

TMT Business Valuation Issues (Technology Media Telecommunications)

The TMT sector consists of a number of technology and media related sectors including:

  • Traditional IT-style providers such as MSP's, software and hardware distributors, 

  • Media companies, predominantly online media or technology related

  • Telecommunications which will range from local and national ISP providers, telephone services and other related

The sector will also include certain areas of software retailing and development, however these businesses can also be classified into other industries (eg accounting software providers can be part of the financial services sector).

The TMT industry issues include:

  • Cost of development and labour

  • Access to skilled workforce (on-shore and off-shore) 

  • Access to suitable broadband and wifi infrastructure

  • Protection and use of intellectual property

  • Effective marketing and sales systems

The industry has opportunities with:​

  • Design of new cloud-based software and software-as-a-service

  • Use of AI, big data analysis, voice applications and virtual reality technology to existing applications to expand market access and enhance services.

  • Selling products and services into export market

The industry has seen significant merger and acquisition activity over the past 1-2 years, with some rationalisation of some operators to gain economies of scale as well as opportunities to secure new technology and intellectual property that can be applied to new markets.  We expect this trend to continue.

Key Industry Statistics

There is no single industry category that covers the TMT industry and but is spread out over many sectors. 

 

According to IBISWorld, there is a wide variety of industry revenue growth rates, including:

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?

SME Performance Whitepaper

Key Drivers of TMT Business Valuations

A TMT business valuation is driven by key factors below such as: 

  • Size and diversity of market coverage

  • Ongoing relationships and arrangements with clients

  • Scale of operations and economies of scale

  • Low labour costs

  • Use of technology

  • Level of product and service development

 

EBITDA Margins tend to be on the high side for most established TMT businesses, although in a start-up phase, profits can be absent.  EBITDA margins range from less than 15% to 35% (for some large providers), depending on the size of the business, industry competition, technology and automation and productivity.

EBITDA Multiples for most TMT businesses will be heavily influenced by size and scale, level of repeat clients and long term client arrangements and staff productivity.  Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 2.0x - 3.5x

  • Revenue of $10m - $20m: 2.5x - 5.0x

  • Revenue greater than $20m: 4.5x - 7.0x

Our Business Valuation Experience

Our TMT business valuation experience has included including business valuations for:

  • Melbourne based MSP and hardware/software businesses post merger 

  • Melbourne and Sydey based IT services providers

  • Franchised mobile IT and PC repairs

  • Melbourne MSP and hardware/software providers post merger

  • Technology software in building and asset maintenance inspection​ services

  • Accounting software development prior to sale of business

  • Builder project management and quoting software

  • IT systems consulting to medium-large organisations for legacy upgrades

  • IT systems consulting and installation consulting to large organisations

  • IT systems consulting, MSP management and hardware provision