Solganick & Co. Issues IT and Tech-Enabled Services M&A Update for Q2 2017

July 21, 2017 – Solganick & Co. issues its latest quarterly M&A update report for the IT and Tech-Enabled Services industry sector for Q2 2017.  You can download and access the full report here: Solganick Co M&A Update Q2 2017

 

The following summarizes the report findings for the quarter:

  • IT and Tech-Enabled Services deal volume decreased by 34.09% from 2017 Q1 to 2017 Q2 and 39.58% from 2016 Q2 compared to 2017 Q2.
  • Total U.S. deal value announced with the IT and Tech-Enabled Services sector in Q2 reached above $16.5 billion.
  • The top 3 IT and Tech-Enabled Services deals in the U.S. accounted for a total of $14 billion.
  • Median deal multiples for Q2 2017 were 1.61x EV/Revenue and 10.5x EV/EBITDA.

 

The IT Services industry has experienced increased activity mainly due to an increase in cloud servicing, cybersecurity and healthcare IT success in recent years. Deal count, however, has decreased in 2016 and is expected to decrease again in 2017.

 

This is even though post valuation transaction value sum has increased. In the second quarter of 2017, IT Services transaction exceeded $16.5 billion compared to about $4.4 billion in 2017 Q1 despite experiencing 26 less deals. This is due to fewer but larger deals, as the top 3 deals of the quarter, according to Pitchbook, accounted for $14 billion of the total deal sum. Conclusively, these trends suggest that the industry may be maturing and that deal count may continue to decrease. However, the growing presence of IT in the tech space may sustain continued growth in invested capital going forward. Moreover, growing transaction sums may reflect high success of previous IPO’s and young companies, suggesting a potential for current small to mid-sized IT Service providers and thus further growth in the industry.

 

We expect consolidation in the IT and Tech-Enabled Services sector to continue at a flat and even pace. The market is mature yet still fueled by the growing need of cloud and security offerings primarily.

 

For the full report go here: Solganick Co M&A Update Q2 2017

 

Solganick & Co. is an independent investment bank and mergers and acquisitions (M&A) advisory firm focused on technology and digital media companies exclusively.   The firm offers strategic and financial buyer relationships within the IT and Tech-Enabled Services industry sector, a deep industry knowledge, and a premium team of experienced investment banking professionals. Our team assists companies to complete mergers, sales and acquisitions that are strategically and/or financially beneficial to a firm’s business model and transaction goals.  Offices are located in Los Angeles and San Francisco, CA.  For more information please contact us.

Posted in IT Services M&A, Quarterly Update, Sector Analysis.