Covid Driving M&A Focus Towards Cloud IT & Outsourcing
London, UK – 23 February 2021.The latest IT & Business Services M&A market report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals how Covid-19 has accelerated demand for cloud computing and related IT infrastructure deals.
The IT & Business Services sector saw an increase in the number of M&A transactions in the second half of 2020, with 437 deals recorded – a 15 per cent increase compared to the 381 deals seen in the first half of 2020.
Miro Parizek, founding partner, Hampleton Partners, said: “We’re seeing a definitive transformation of our use of IT in the workplace – swapping on-site technology and services in favour of remote, outsourced and easily accessible virtual solutions – which itself is now impacting M&A targets.
“Acquirer focus has shifted towards IT companies developing covid-friendly product offerings and those with products which could help customers weather the covid storm. This includes workplace digitalisation, remote working capabilities, cloud integration, and more. The second half of 2020 also saw acquirers target tech support firms and offshore or outsourced services, which have been in high demand across the board given the rapid transition all enterprises had to make last year.”
Cloud integration – a top priority
Cloud and systems integration solutions are garnering a lot of attention, as they represent the technical framework guaranteeing successes on the Enterprise Software side.
A deal indicative of this trend is IT giant IBM’s acquisition in December 2020 of Helsinki-based multi-cloud consulting firm Nordcloud for an undisclosed amount. Nordcloud was founded in 2011 and raised more than $26 million prior to the deal.
The Nordcloud deal gives IBM access to 500 consultants certified in AWS, Microsoft Azure and Google Cloud Platform, as it shifts its approach to working with customers however they wish to implement their cloud strategy.
Professional services firms make up high volume of dealmaking
Professional services firms continue to make the most acquisitions, with Accenture acquiring 66 companies and Deloitte acquiring 18 companies over the past 30 months to cover all types of emerging client needs.
Core targets include companies expert in analytics or digital marketing, especially given the rise of digital commerce to compensate for the crisis in brick-and-mortar retail, plus more cloud-native firms.
Share of private equity deals strong
Private equity buyers made a return to the table of big-ticket deals, with Platinum Equity, Veritas Capital and Baring Private Equity all making an appearance.
2020 saw 265 transactions carried out by private equity buyers or their portfolio companies, representing 32 per cent of deals in IT & Business Services. This is part of an on-going trend whereby the share of private equity buyers has grown from around 15 per cent in 2013 to around a third of all deals.
The largest disclosed deals in the second half of 2020
IT & Business Services M&A 2021
Miro Parizek, Founder & Principal Partner, said: “M&A transaction activity rebounded strongly in 2020 after a brief hiatus in quarter two and ultimately reached the highest half-year volume in the IT & Business Services sector since 2018.
“We anticipate that 2021 is going to be an active year for M&A in this sector, as private equity investors continue to consolidate certain markets and larger established vendors acquire specialised skills not developed organically in-house.”
Hampleton’s IT & Business Services M&A report analyses transactions, trends and activity across the Integration, Technology and Support Services segments as well as IT Outsourcing.
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Note to Editors:
Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database (www.451research.com); Capital IQ; and CB Insights.
Download the full Hampleton Partners’ IT & Business Services M&A Market Report 1H2021: https://www.hampletonpartners.com/reports/it-business-services-report/.
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech and IT & Business Services.
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