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2026 H1 Update

German M&A Trends in Technology, Media and Telecommunications
Sendemast mit Wendeltreppe
  • Article
  • 7 minute read
  • 05 Aug 2026

Your expert for questions

Gerald Schustereder

Gerald Schustereder
Partner Deals Transaction Services and German TMT Deals Leader
Tel: +49 89 5790-5541
Email

The German TMT market is normalising. Deal counts are still coming down, but they are converging towards pre-pandemic levels rather than signalling a structural decline in activity. Germany recorded 211 TMT transactions in H1 2026, down from 237 in H2 2025 and well below the pandemic peak of 375. Measured against the pre-boom years, that trajectory looks like a return to a sustainable baseline rather than a downturn. 

Technology dominates the German TMT sector, accounting for 186 of the 211 deals in H1 2026. Media and Entertainment contributed roughly 20, and Telecommunications only a handful. Corporate buyers took 36% of German TMT assets in H1 2026, with financial sponsors accounting for the balance, a reminder that private equity remains the dominant force in the German market. The caution shown by some sponsors is, in fact, creating room for corporates to pursue targeted acquisitions of their own. Alongside those focused technology purchases, portfolio optimisation is driving activity in the media and semiconductor industries, where owners are reshaping what they hold rather than simply expanding.

The global picture explains where the value has gone. Global TMT deal values rose 48% to $472bn in the first five months of 2026, even as global deal volume fell 9%. Fifteen of the sixteen megadeals above $5bn were in Technology. The pattern for 2026 is therefore fewer, larger and AI-driven deals globally, while German activity stays concentrated in the mid-market and value builds up selectively rather than across the board. PwC’s Mid-year Global M&A Outlook 2026 sets out this decoupling of value and volume in more detail for anyone tracking the macro backdrop.

Technology

Software remains the engine of German technology dealmaking. Despite sharp declines in absolute numbers, it still made up by far the largest share of activity in H1 2026, with 132 of the 186 technology transactions. IT services followed with around 30 deals, while the remaining sub-sectors recorded transaction counts in the single digits or low double digits. The picture below shows where capital and attention are concentrating.

Software is going through a valuation reset driven by AI. Investors and advisers now sort assets into three categories, AI-native, AI-resilient and AI-exposed, and the distinction matters for pricing. Businesses without defensible data, embedded workflows or high switching costs fall into the AI-exposed category, and their economic moats are being reassessed from wide to narrow. Morningstar applied exactly this downgrade to six prominent software companies in March 2026, citing AI disruption and the risk to long-term pricing power. The practical consequence is a widening valuation spread: buyers pay up for AI-resilient and AI-native assets and discount aggressively for anything generative AI could commoditise.

Diligence has changed accordingly. The question is no longer only how sticky the product is today, but whether an agentic AI tool could replicate the workflow within a year or two. That reframing sits behind much of the current caution on SaaS multiples, and it is where the sharpest disagreements between buyers and sellers now surface. Vertical and regulated German software tends to be better protected than generic horizontal SaaS. 

The reset has not closed the market. If anything, depressed public valuations have opened a take-private window, and the software sector shows above-average positive prospects for buyouts over the next 18 months. Sponsor activity in Germany reflects this. Recent processes include SUSE, the open-source enterprise specialist, KGS Software (SAP-certified archiving), Raynet (IT asset management, an exit for PINOVA Capital in December 2025) and Usercentrics in consent management. Parking-technology assets are also moving, with Wemolo (backed by Armira Growth, HENQ and ALP.X) exploring a potential sale in June 2026 and MTH looking to divest Designa-Axess Industries in full, a business that combines hardware and software. SWARCO’s June 2026 carve-out of its Intelligent Transportation Systems unit from its road-marking division points to the same trend of separating scalable software from legacy hardware. Corporate owners are pruning platform assets too, with SupplyOn’s automotive shareholders (Bosch, ZF, AUMOVIO and Schaeffler) selling the cloud-based supply-chain platform to Bain Capital.

Strategics are buying capability rather than scale. SAP has been the most active, adding Reltio and Dremio to strengthen its Business Data Cloud and paying more than €1bn for Prior Labs (founded by Frank Hutter) to strengthen AI-ready analytics. These are data and AI tuck-ins, bought to close specific gaps rather than to consolidate a market.

Cybersecurity has become a defensive investment case that does not flex with the economic cycle. The geopolitical climate is the first driver, and AI is the second: attacks are growing more numerous and more dangerous as adversaries automate them, which is precisely why AI-based security approaches are in such demand among investors. The third driver is regulation. NIS2, the EU directive that raises cybersecurity obligations for operators of critical infrastructure, and DORA, the EU regulation that sets digital operational resilience requirements for the financial sector, both act as mandatory investment triggers for operators of critical infrastructure. Their compliance deadlines create demand regardless of the wider economy, which is exactly what sponsors want in a defensive asset.

Funding patterns have shifted with the thesis. European cyber financing has moved towards fewer but larger rounds, edging venture activity closer to the buyout market. German processes bear this out: iC Consult in identity security passed from The Carlyle Group to Bridgepoint in April 2026 to fund international expansion, added AI capabilities and managed-services growth, and Securepoint’s network-security business came to market as an exit for Maxburg Capital Partners in February 2026.

IT services and custom software development remain consistently active even where headline volumes are thin. Netcloud attracted first-round bids of €200m to €300m in April 2026, with EGS Beteiligungen among the investors. Deutsche Beteiligungs AG began preparing freiheit.com for sale in March 2026, Armira put Salesfive Consulting (a Salesforce specialist) into a process in April 2026, and Eraneos saw its German PE owner explore a sale in May 2026. The common thread is sponsor-to-sponsor and sponsor-to-strategic rotation in advisory and implementation assets that carry recurring, AI-adjacent demand.

Capital is rotating back into hardware and the physical layer of AI infrastructure. As software loses some of its defensibility, hardware and chips look more attractive, and M&A is increasingly targeting the silicon stack, the power-management and high-speed-interconnect components that determine whether AI datacentres can run at capacity. These are the current bottlenecks, and owning them is now a strategic position rather than a commodity play.

Global digital infrastructure spending is projected to rise from $256bn in 2024 to $322bn by 2050, and datacentre investment specifically is in a hyper-growth phase, growing 121% per year between 2024 and 2027. PwC’s Global Infrastructure Outlook 2025–50 sets out the long-run trajectory and the coupling of digital infrastructure to power supply, which is fast becoming the binding constraint on new capacity. The scale of new-build activity, and the emergence of the datacentre as an asset class, is set out in more detail on PwC’s dedicated resource at www.pwc.de/de/real-assets/data-center-als-neue-assetklasse.html.

German activity spans both the asset and component sides. On datacentres, Cube Infrastructure Managers put firstcolo up for a majority sale or full exit in May 2026, and AGC Equity Partners (80%) alongside Iron Mountain (20%) began selling a majority stake in the FRA-1 27 MW facility in Frankfurt in April 2026. Long-term institutional capital through infrastructure funds is the natural buyer for these assets, given their yield profile and the length of the underlying leases.

Semiconductor demand remains exceptionally strong, driven by the need to equip new datacentres, and sovereignty considerations have added a domestic dimension: two chip fabs are currently under construction in Germany. Portfolio moves reflect the same demand pull. ams OSRAM is reshaping its portfolio to accelerate deleveraging and refocus on digital photonics, agreeing to sell its analog/mixed-signal sensor business to Infineon for €570m in February 2026 and its CMOS image sensor business to indie Semiconductor for €40m in May 2026. Infineon, in turn, is optimising its manufacturing footprint, selling its Bangkok backend site to MPI in February 2026. In communications equipment, the sale process for Power Plus Communications (PPC) launched. The firm covers roughly 70% share of the German smart-meter-gateway market, a position underwritten by regulation. Nokia’s classification of its Enterprise Campus Edge unit as non-core, with a process launched in December 2025, rounds out the picture of portfolio pruning across the hardware landscape.

Physical AI, the application of AI to machines that sense and act in the real world, is emerging as a distinct investment arena. Estimates put the global market at €430bn by 2030, and Europe is well placed given its industrial and automotive base. For German engineering, this is a rare case where the incumbent strengths (mechatronics, factory automation, precision manufacturing) align with the direction of the technology. PwC’s “Physical AI: Intelligence in motion” sets out how this next wave of AI moves from software into hardware and what it means for industrial players.

How companies gain access to AI is itself reshaping M&A, particularly in the United States and around datacentre and compute capacity. Rather than buying outright, firms increasingly secure compute, data and power through partnerships, minority stakes and capacity agreements. Capacity and offtake agreements tie chip suppliers, investors and customers together, minority investments secure access to frontier models without full ownership, and special-purpose vehicles fund datacentre build-out off balance sheet. Access is increasingly preferred to control, because full ownership of fast-depreciating or capital-intensive assets carries risks that a contractual arrangement can avoid.

Two German transactions illustrate the range. Cohere’s combination with Aleph Alpha in April 2026, valuing the merged group at around $20bn, was framed around resilience and geostrategic and economic collaboration, a consolidation of frontier-model capability with a European anchor. Separately, Fresenius and SAP backed Avelios Medical in May 2026 to build an open, interoperable, AI-enabled digital healthcare ecosystem, an example of strategics using minority and partnership structures to secure a position in applied AI rather than absorbing the target wholesale.

Quantum computing is moving from state-funded research and large corporate research departments towards segments that institutional investors can underwrite. The shift is early, but the direction is clear: as hardware roadmaps firm up and commercial use cases move beyond the laboratory, the asset class is becoming investable on terms that funds recognise.

Space technology has reached a similar inflection in Germany. EQT’s acquisition of Berlin-based Exolaunch signals that the sector has reached buyout maturity, with a business model predictable enough to support institutional ownership. Both areas remain niche within German TMT, but they mark the frontier of where sponsor capital is beginning to move.

Media and Entertainment

The German entertainment and media market reached €117bn in 2025, up 3.3%. Within that total, digital revenues excluding connectivity rose 7.8% to €38.9bn, while non-digital revenues fell 1.2% to €44.3bn. PwCs German Entertainment & Media Outlook (GEMO) 2026–2030 reads this divergence as a structural regime change, with the market moving from volume-driven towards optimisation-driven growth, competing on price, premium positioning and efficiency rather than on reach alone. The report covers the individual market segments and their growth drivers in full.

Consolidation is the defining corporate theme. The RTL/Sky Deutschland combination serves as a template for building European counterweights to the global streaming platforms, pooling content and subscribers to compete for attention against far larger US rivals. The same optimisation logic is driving portfolio moves at the big German media houses. Axel Springer acquired the Telegraph Media Group from RedBird IMI for £575m in March 2026 to preserve a heritage brand while extending its digital and international footprint, and added the US property-media business Bisnow in the same month to broaden its cross-brand offering. In music, BMG Rights Management (a Bertelsmann unit) and Concord agreed in April 2026 to combine into a leading independent music company, and Bauer Media Group acquired Télé 7 Jours from CMI France in January 2026 to strengthen its French portfolio. Bertelsmanns logistics moves, an 80% stake in India’s Let’s Transport in February 2026 and Arvato’s purchase of THINK Logistics in Canada in March 2026, show the group deploying capital into international services alongside its media core. The consolidation logic was underscored in late 2025, when MFE secured a 75.61% stake in ProSiebenSat.1, becoming its majority shareholder and reinforcing the drive to build European scale against the US streaming platforms. The open question for 2026 is whether MFE moves towards full legal integration of ProSiebenSat.1.

Gaming is a convergence catalyst rather than a side segment. The German gaming market reached €7.9bn in 2025, up 2.3%, with social and casual gaming dominating at a 47.8% share as audiences broaden beyond traditional players. The launch of GTA VI in November 2026 is widely expected to redefine engagement metrics across media and gaming, pulling attention and spend towards interactive entertainment and setting a new benchmark for audience and revenue mobilisation.

Advertising remains under structural pressure from platform dominance. Online advertising in Germany reached €20.7bn in 2025, but Google, Meta and Amazon absorb almost all of the growth, which pushes German media houses towards login alliances such as netID to build first-party data at scale. The move to first-party data is as much a defensive response to platform gatekeeping as it is an opportunity. Out-of-home advertising has been a live consolidation question in its own right: Ströer was effectively put up for sale in a sell-side push during 2025 and 2026, with consortia including I Squared Capital and Blackstone and later InfraVia weighing bids for its core assets or the whole company at a valuation of roughly €2.5bn.

The spread of AI across the media value chain also raises unresolved liability questions, from training data to generated output, which are becoming a standing item in diligence on media and content assets.

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Telecommunications

In German telecoms, the fibre segment has rewritten how deals are valued: value now depends on homes connected rather than homes passed. The industry spent years measuring success by network reach, but the economics only work when subscribers take service. With only 6.6 million of 24.3 million homes passed actually activated, the take-up rate stood at just 27% (as of June 2025) — a persistent gap between build-out and use that lies at the heart of the sector’s challenges.

The result is distress-driven consolidation. High capital costs and low utilisation have forced a shakeout across a fragmented market of more than 250 operators. Ruhrfibre filed for insolvency in May 2026 after its owner CVC DIF (with a €180m investment) declined to provide further capital, triggering a search for new backers to continue the FTTH rollout. 3i Infrastructure fully wrote off its DNS:NET investment (book value £212m) in 2026, as conservative FTTH assumptions, a higher cost of capital and missing follow-on financing took hold, while distressed-debt specialist FitzWalter Capital moved to buy up the company’s debt. Deutsche Glasfaser illustrates the pressure most clearly: in April 2026 it finalised a restructuring, cutting its rollout target from 6.0 to 3.2 million households while existing investors OMERS/EQT provided €845m in equity and €400m in debt, €1.7bn of debt was subordinated and interest on €5.4bn of senior debt was suspended for two years. That pressure is now feeding through into transactions: iCON Infrastructure’s Strategic Fiber Networks (SFN) agreed to acquire Northern Fiber Holding (NFH) from UBS Asset Management for €100m to €120m in July 2026 in a lender-driven auction, with only about a third of NFH’s €300m in bank debt repaid and the equity already fully written off. Consolidation is not confined to distressed situations, though. Eurofiber divested its Berlin B2C business (Eurofiber Netz) to MIH Management AG in June 2026, a portfolio decision rather than a forced sale, and stronger platforms are steadily absorbing sub-scale networks across the market.

A newer competitive pressure comes from satellite operators. Low-earth-orbit constellations are moving from a niche connectivity option towards direct competition with terrestrial networks, particularly for rural coverage and direct-to-device services. For German operators, that adds a strategic question to the connectivity debate: whether to treat satellite capacity as a threat to fixed and mobile revenues or as a complementary layer to be partnered with, and it is likely to shape network strategy and deal rationale over the coming years. 

These competitive and technological shifts are prompting the large incumbents to rethink their portfolios. Deutsche Telekom illustrates the strategic reshuffling: press reports have pointed to a possible merger involving T-Mobile US and weighed a spin-off of its data-centre business.

PwC survey: Challenges of a comprehensive fibre rollout

What is holding back fiber-optic expansion in Germany and how to achieve a faster implementation? To answer these questions, we surveyed twelve telecommunications companies and put their answers into context with further analysis. The results highlight the current challenges and identify specific measures that can be taken to accelerate the expansion of fiber optic networks in Germany.

Learn more

Market outlook

The mood entering the second half of 2026 is one of cautious selectivity rather than broad confidence. The building blocks of a recovery are in place, but several forces pull in different directions, and the balance between them will decide how quickly German TMT dealmaking picks up.

On the supportive side, private equity is sitting on substantial dry powder and faces a growing exit backlog, which creates pressure to transact on both the buy and sell sides. PwC’s Private Equity Trend Report 2026 documents that liquidity pressure and the ageing of portfolios held through a thin window. The caution of some sponsors also opens space for corporates to make targeted acquisitions, and corporate portfolio work is adding a steady flow of assets, visible this year in the carve-outs at ams OSRAM, Nokia and among the vendors selling data and AI businesses to SAP. Falling but still elevated financing costs, together with a more settled but still uncertain inflation picture, make debt-backed deals easier to underwrite than they were before.

The constraints are just as real. Valuation gaps between buyers and sellers remain the single biggest brake on activity, and they are widest precisely where AI has reshaped the outlook, in software. The re-rating of assets into AI-native, AI-resilient and AI-exposed is now the defining diligence question of the market, and until buyers and sellers converge on what an AI-exposed business is worth, deals in that segment will be slow to clear. Geopolitics compounds the caution. Technology sovereignty has grown from a semiconductor concern into a broad narrative spanning cloud, AI, cybersecurity and defence, which feeds directly into FDI screenings, the government reviews of foreign takeovers of sensitive assets, and increasingly determines which buyers are even eligible for a given target. Regulation has become an active deal-design factor rather than a box ticked at closing.

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Gerald Schustereder

Gerald Schustereder

Partner, PwC Germany

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Director Deals TMT, PwC Germany

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