December 20, 2024 – The software and IT services M&A market has seen a rebound in 2024 after a dip in 2023, with a focus on smaller transactions and strategic acquisitions.

Key Trends in 2024:

• Recovery in M&A Activity: Deal volume is projected to grow by 15-20% fueled by companies looking to enhance their digital capabilities and expand into new markets.
• Focus on Data Analytics and AI: Increased M&A activity in the data analytics sector, particularly around emerging technologies like generative AI and data analytics software and consulting services.
• Cloud Computing Consolidation: Strong growth in cloud infrastructure services spending is driving M&A activity among Managed Service Providers (MSPs) and cloud partners.
• Cybersecurity Concerns: The increasing complexity of cybersecurity threats is leading to consolidation in the cybersecurity sector.
• Private Equity Influence: PE-driven deals are expected to reach record highs, driven by the availability of capital and attractive valuations in the software sector.

Forecast for 2025:

• Continued Growth: M&A activity is expected to continue to rise in 2025, with a focus on strategic acquisitions and digital transformation.
• AI and Automation: Increased investment in AI and automation technologies is expected to drive M&A activity in these sectors.
• Cybersecurity Focus: Cybersecurity will remain a key area of interest for buyers, with a focus on acquiring companies with strong security capabilities.
• Cross-Border Deals: Cross-border M&A activity is expected to increase, despite regulatory challenges, as companies look to expand into new markets.

Overall, the software and IT services M&A market is expected to remain strong in 2025, driven by the ongoing digital transformation of businesses and the increasing importance of technology in all aspects of the economy.

Additional Insights:

• Talent Acquisition: Many M&A deals are driven by the need to acquire talent and expertise in key areas like AI and cybersecurity.
• Vertical Specialization: There is a growing trend towards vertical specialization, with companies acquiring software and IT services firms that focus on specific industries.
• Focus on Profitability: Investors are increasingly focused on profitability, leading to a greater emphasis on due diligence and valuation.

“Our firm is gearing up for a very active 2025, and we fully expect the first two quarters of the year to show increased mergers activity within artificial intelligence, data analytics, cloud, cybersecurity, and industry vertical technologies, including healthcare, education, IoT, and finance,” noted Aaron Solganick, CEO and founder of Solganick & Co.

About Solganick & Co.

Solganick is a data-driven investment bank and mergers and acquisitions (M&A) advisory firm focused exclusively on software and IT services companies. We specialize in managing and executing sell-side and buy-side M&A transaction processes to increase shareholder value. Our team provides industry sector expertise as well as M&A and industry domain experience to fast-growing and established companies.

For more information, please contact us.