Deal flow remains resilient and multiples rise
London, March 21st, 2017: The latest market report from technology M&A advisory firm, Hampleton Partners, reveals a 60 per cent drop in the total sum of transaction values in the second half of 2016, after mega deals such as the $8.5 billion tie-up between HP Enterprise and Computer Sciences Corp. led to a remarkably strong start to the year.
The IT Services M&A report, which covers mergers and acquisitions in the period between July 2014 and December 2016, shows the $10.75 billion recorded in 2H 2016 amounted to less than half the total value of deals during 1H 2016.
The trailing 30-day median revenue multiple remained steady at 1.0x and was a year-on-year improvement from a revenue multiple of 0.9x throughout 2015.
Out of 2293 transactions in the trailing 30-month period, featuring 1800 acquirers, deals in the Distribution Tech Services & Support segment accounted for 41 per cent of all deal making, followed by activity in the IT Outsourcing space with 37 percent of all transactions.
Dentsu Aegis Network was the sector’s top acquirer in the last 30 months, with a total of 32 deals, followed by Accenture with 29 deals announced in the same period. Other top buyers in the sector include Ingram Micro, Capita, Publicis, Ericsson and Keywords Studios.
Fast-evolving buyer landscape
Despite lower values in 2H 2016 and a maturing market, IT services mergers and acquisitions remains resilient in terms of deal flow. Once dominated by big consultancies, the buyer landscape continues to evolve into an increasingly diverse pool that includes telecom companies, media groups and professional services firm seeking to improve their IT capabilities.
Moreover, underpinning the trend in strong demand from strategic, serial acquirers seeking bolt-on acquisitions is growing interest from Asian buyers. These are increasingly coming to the forefront and gaining more experience in cross-border mergers and acquisition and this means the IT services consolidation wave is likely to carry on into 2017.
Miro Parizek, Principal Partner, Hampleton Partners says: "The initial sharp rise in deal values at the start of 2016, and the consistent deal flow thereafter suggests demand for new technologies, such as artificial intelligence, will fuel competition for assets with a clear market differentiator."
About the research
The 8th bi-annual “Hampleton Partners IT Services M&A Research Report, 2H 2016” covers the period from July 2014 – December 2016, using data from 451 research. Hampleton’s research reports cover the following industries: Automotive Technology, Digital Marketing, E-Commerce, Enterprise Software, Internet of Things, IT Services and Outsourcing, SaaS and Cloud Services and Fintech.
Download our full reports here: www.Hampletonpartners.com/research
About Hampleton Partners
We are a London-based M&A advisory firm, serving the owners and shareholders of technology companies. With offices in the US and Europe, and associates in Asia, Hampleton combines international reach with local resources to provide the very best in M&A and corporate finance services. The Hampleton team boasts an invaluable combination of deal making expertise, operational experience, deep industry knowledge and an extensive network of contacts.
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