Introduction: Technology Services Sector Themes
M&A activity in the Technology Services ecosystem remained robust in Q2’23, with a wide array of key strategic acquirers leading acquisition activity in the sector. Strategic activity has been concentrated around several investment ‘themes’ ranging from Digital Transformation and Cloud Enablement to Cybersecurity and Managed Services.
Technology Services M&A Update
- M&A volume in the Technology Services sector increased 20% Q-o-Q in Q2’23, driven by a number of key investable themes
- High-quality assets continue to garner interest from strategic and financial acquirers, due to industry tailwinds and a significant amount of capital sitting on the sidelines
- Aggregate deal value has decreased measurably, due to massive contraction among large, transformational transactions
M&A Activity is Driven by Several Key Investable ‘Themes’
- A number of key themes are at the heart of M&A activity in the Technology Services landscape
- Key themes include Digital Transformation, Cloud Enablement, Managed Services, Data & Analytics, Cybersecurity, and Government Services
A Vast Array of Strategic Acquirers are Driving M&A in the Sector
- The most active strategic acquirers include Accenture, Cognizant, IBM, NTT Data, DXC, Atos, Capgemini, Wipro, CGI, and Globant
- KPMG is tracking a total of 93 acquirers that are most active in the ecosystem, beginning on page 11
Public Market Valuation Trends
- Valuation multiples (EV / LTM EBITDA) of publicly-traded Technology Services companies appreciated slightly in the quarter
- Median multiples increased in Q2’23 to 14.9x, up from 14.4x in Q1’23
- The Technology Services index appreciated 4.6% in the quarter, reflective of an overall rebound in the equity markets
