November 2021 M&A Flash Report – IT Services and MSP’s
M&A Summary
M&A activity in the IT services and Managed Service Provider (MSP) sectors was robust in November 2021, characterized by strong deal volume and expanding valuation multiples. Solganick & Co. reports that this trend is driven by increasing market demand for quality companies, with private equity-backed platforms significantly contributing to higher valuations and overall demand. Key valuation drivers include meaningful recurring revenues, demonstrated top-line growth and profitability, strong client relationships, and specialized industry or technology expertise. The firm anticipates continued strong deal volume and high valuations for buy-vs-build M&A strategies into 2022.
- Deal activity has been strong in 2021 for IT services providers (e.g., companies providing managed IT services, systems integration, IT consulting, and other related services).
- Valuation multiples are expanding, driven by an increasing market demand for quality companies.
- Several private equity backed platform companies have helped drive up valuations and overall demand in an attempt to become market leaders.
- Scarcity of “quality” assets is driving intense competition among both financial and strategic acquirers.
- Expecting 2022 to continue strong deal volume and high valuations for buy vs build M&A strategies.
Valuation Drivers
Meaningful recurring revenues (ideally >50%) |
Demonstrated top-line growth and history of profitability (gross profit and EBITDA margin) |
Returning and recurring client relationships |
Focus on industry sector(s) and/or technology expertise (data analytics, SAP, Oracle, MSFT, Snowflake, cybersecurity) |
Low levels of customer concentration |
Seasoned senior management, subject matter experts and sales team |
M&A Transactions Announced (Selected), November 2021 – IT Services and MSP’s
Announced Date | Target | Acquirer | Focus |
November 2021 | EightCloud | Navisite | Salesforce, Cloud, IT Consulting |
November 2021 | Standav | Brillio | Salesforce, Cloud, IT Consulting |
November 2021 | ClearEdge Partners | Accenture | IT Spend Management |
November 2021 | CCG Analytics | 3Cloud | Data Analytics Consulting, MSFT Azure |
November 2021 | Skybridge Global | Datavail | Oracle Systems Integrator |
November 2021 | Halski Systems | Logically | MSP |
November 2021 | Echo Technology Solutions | Abacus Group | Financial services focused MSP |
November 2021 | Wrightcore | Converge One | MSP and technology solutions provider |
November 2021 | Avata | Rockwell Automation | Oracle Systems Integrator |
November 2021 | Cognicase Management Consulting | CGI | IT Consulting |
November 2021 | On Time Tech | Valeo Networks | MSP, MSSP |
For more information or to download the full M&A report please go here: https://solganick.com/wp-content/uploads/2021/12/IT-Services-and-MSP-MnA-Flash-November-2021.pdf
Solganick & Co. is a data-driven investment bank and M&A advisory firm focused exclusively on the software and IT services sectors. For more information, please contact us.