When a lot of people think of investment banking and working on those large-cap, sexy deals, TMT is often the first space that comes to mind, and for good reason—those front-page stories on the Wall Street Journal are often pretty big deals about technology, entertainment, and telecommunication towers. TMT can be concentrated among a few key banks, especially on the entertainment side. Some of the big standout banks include Allen & Co., Centerview, Goldman Sachs, Moelis, LionTree, Morgan Stanley, and JPMorgan. You will find most of these deals on the M&A and equity side (particularly IPOs and follow-on offerings), although some of the more mature companies will give you some experience in debt capital markets and leveraged finance. Below, I will discuss some of the key benefits of working in this highly coveted space:
TMT is a Broad Sector: Despite the space being more concentrated among a few top players compared to spaces like healthcare and industrials, the sector itself is pretty broad, albeit with a focus on equity, especially on the technology side. Furthermore, the business models themselves can be pretty varied; more specifically, if you work with TMT companies, you will see a larger concentration of subscriber-centric businesses, as well as a deep understanding concerning both the development and expansion of winning applications and both B2B and direct-to-consumer penetration strategies that are commonly seen throughout media and communications business models. For the entertainment vertical in particular, you will see a lot of overlap with consumer products, but for telecommunications, you will find your path crossing with data verticals most often, which, as we are seeing with the explosion of the metaverse and AI programs, are the surefire wave of the future.
The Sector Really Thrives In Bull Markets: which, generally speaking, are more common within the United States economy. As previously discussed, a lot of the TMT space is focused on equity, and this makes sense; technology companies tend to be overvalued and negative in terms of cash flow, so a vast majority of the activity in the space will be stock-based M&A and equity underwriting. These kinds of deals are some of the best ways for you to get more experience with the fastest-growing sector within America. This also holds if you look at the stock market. In general, the NASDAQ returns have outpaced both the S&P 500 and the broader market (NYSE), so you are almost guaranteed to get some type of sexy deal or exciting investment experience in such a robust and rapidly growing space. The stronger returns typically yielded by TMT also make it easier for you to expect higher returns on your investments, which means better exit opportunities for your capital and, in turn, a higher return for your fund and a fatter bonus for your bank account.
The Space is Only Going Upwards: Going a tad deeper into some of the elements described with the NASDAQ returns in comparison to the broader market Technology companies in particular tend to get a pretty nice “halo effect”, meaning that investors are willing to keep their cash involved and invested with the enterprise for a longer period. This can give you a broader range of companies to partake in deals and investments with since so much of the global capital is being allocated toward the TMT space.
The Deals You Work On Are Pretty Exciting, Especially in the Large Cap Space: I currently work at one of the largest TMT companies on the globe, and I can tell you that there is nothing more rewarding than working with endeavors that impact people on an economic and personal level. During my time in college and consulting, I worked on and completed extensive research projects concerning both the monetization of entertainment intellectual property and the differentiation of strategies concerning television syndication, derivative products, and merchandising across both the United States and APAC regions. Throughout these intensive endeavors, I was able to develop case studies analyzing the impacts of specific marketing and direct-to-consumer merchandising strategies across some of the globe’s most iconic intellectual properties while simultaneously analyzing the consumer data that I had collected in collaboration with my firm to provide business recommendations for future licensing strategies and more effective brand monetization and utilization; this experience is what landed me the role that I have now. Of course, practices like these might not be as applicable in the middle market space, but these types of exciting stories and experiences can help drive your future interviews and resume to new heights. Plus, as egotistical as it may sound, it’s never a bad thing when your friends and family are jealous of your professional experience.
You Will Get Some of the Best Exit Opportunities: There are several ways you can take your career to the next level in TMT—one of the most common is of course going the traditional investment banking route to private equity, which makes sense given the broad landscape of blockbuster deals that can adequately attract private equity investors. When it comes to your private equity exits, some of the largest, most attractive, and highest-paying private equity firms in the world specialize in TMT, and aligning your early deal experience with these can help to secure an offer from one of these firms later down the line. However, getting experience within the TMT can make a great case for you to go the corporate route and transition to a role with a better work-life balance by joining a startup or large-cap telecom company (just like yours truly!). If you’re looking to give yourself the broadest space of exits early on in your career, healthcare is the only space that potentially offers TMT (for more info, consult the “Working in Healthcare” article recently published on OfficeHours).
In short, working in TMT will never be a bad thing. You can always find yourself with a wide array of deals to work on, scattered across sizes, product types, and expertise needed, but the one thing that will always be certain is that there will never be a shortage of opportunities. If you want to learn more about some of the IB and PE opportunities in the space in particular, consider checking out some of the coaches on OfficeHours with experience in the space.
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