IT capabilities remain core functions of tech growth
Global IT services spending is anticipated to continue
strong after the astronomical increases seen in 2021.
According to a recent forecast from Gartner,
worldwide IT spending will grow a further 5.1% in
2022 to reach $4.5 trillion in 2022.
We are now wholly familiar with the idea that the
changes in workforce behaviour towards remote and
hybrid models catalysed digitalisation. The divergence
from traditional, pre-pandemic work environments
instilled greater demand for cloud-based services to
replace legacy, on-site infrastructure. This led to
enterprise spending on cloud services doubling to
reach over $530 billion, according to a report by IDC.
Firms are being forced to respond to this
reorientation by increasing investment and subsequent
IT budgets. This has translated into a marked increase
in M&A activity.
Increased IT Services expenditure is also illustrative of
the significance of IT services within the wider tech
boom. Core integration and support functions are
crucial to a vast array of verticals, with sectors such as
Fintech, Digital Commerce and even governmental
agencies all requiring IT modernisation. This, in turn, is
.
1 | 12 IT & Business Services M&A Overview 1H 2022
driving the B2B IT Services market and thereby M&A
activity, with acquirers looking to incorporate these
services into their offerings, and to own segments of
the IT Services market.
In the IT Services M&A landscape, firms serving or
delivering functions within market-leading vendor
ecosystems – such as Microsoft, Salesforce,
ServiceNow, SAP or Oracle – have experienced
interest as transaction targets. Growing business
demand for these ecosystems has created, in essence,
a secondary market, enabling firms to offer
complementary support services, be they integration
service providers, consulting firms or value-added
resellers.
Meanwhile, Managed Service Providers (MSPs) are
seeing a further boom in popularity. The extent to
which they customise and tailor offerings provides a
superior customer experience and acts as an in-road
to enable acquirers to offer further products and
services. MSPs provide a strategic position as the first
port of call, placing them in direct contact with
customers, thereby increasing their desirability as an
acquisition target.
 M&A summary

Transaction volume turbo charges…

The IT & Business Services sector saw a 10% increase in 2020. In 2H2021, the sector recorded 538 deals
in the number of M&A transactions between 2020 compared to 437 in 2H2020.
and 2021, with 902 deals recorded compared to 818
.

Total number of deals & valuation multiples in IT & Business Services

600

10.0x 10.0x 10.2x

9.6x 9.7x 9.4x
500 9.1x
8.3x 8.7x 9.1x 9.0x 8.9x
8.3x 8.2x 8.6x
8.1x
400

300

200

100 1.0x 1.0x 1.1x 1.1x 1.1x 1.2x 1.2x 1.2x 1.2x 1.1x 1.2x 1.2x
0.9x 0.8x 0.9x 0.9x

-
1H 2014 2H 2014 1H 2015 2H 2015 1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

The above graph covers the period between January 2014 and June 2021. Throughout this M&A report, median “trailing 30-month” multiples plotted in the graphs refer to the 30-month period
prior to and including the half year.

…with valuations resuming their

upwards trajectory
5x 20.1x 35x
33.1x
In 2H2021, the trailing 30-month median 30x
4x
EBITDA multiple ticked back up to 9.4x, 25x
while the trailing 30-month revenue 3x
20x
multiple maintained a higher than median
15x
level, coming in at 1.2x. 2x

10x
However, these values only depict a mid- 9.4x
1x
1.2x
point amongst a broader range and 5x

1.1x
depend on a multitude of factors, 0x 0.1x 0x

including growth rates, profit margins, Trailing 30-month Trailing 30-month EBITDA
geography and domain expertise. revenue multiple multiple

.
While the trailing 30-month median revenue multiple came in at 1.2x, 50% of all deals were in the 0.5x to 2x
range. Furthermore, the minimum revenue multiple paid out was 0.1x, while the maximum was 20.1x. The
trailing 30-month median EBITDA multiple came in at 9.4x, with 50% of all deals in the 6x to 12.3x range. More
dramatically, the minimum EBITDA multiple paid out was 1.1x, while the maximum was 33.1x.

2 | 12 IT & Business Services M&A Overview 1H 2022

 Strategic vs. private equity analysis

The IT & Business Services space has seen sustained
interest from financial buyers, which have carried out
over a third of all acquisitions in the past 30 months. .
35%
Strategic
Financial
65%
Proportion of deals by acquirer type, 2019-2021
With access to cheap financing and leverage for more
and larger acquisitions, over the past five years the
.
median EV/EBITDA multiple for deals involving a
financial buyer has consistently come in higher than
strategic multiples: while the trailing 30-month median
EBITDA multiple for strategic acquirers has not
exceeded 10x, for financial buyers this figure reached
close to 12x in 2019. In 2H2021 the trailing median
EBITDA multiple for financial buyers was 10.3x, and
8.4x for strategic buyers.
Meanwhile, the divergence between revenue multiples
paid out by strategic vs. financial acquirers is less
pronounced. In fact, in 2020 private equity buyers paid
out lower multiples when considering the trailing 30-
month revenue multiples. This figure has since inched
back up, with a 1.3x trailing 30-month median revenue
multiple in 2H2021 compared to 1.1x for strategics.

Trailing 30-month median revenue multiple by acquirer type by half-year, 2016-2021

3.0x

2.5x

2.0x

1.5x
1.3x
1.0x 1.1x
0.5x

0.0x
1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

Strategic Financial

Trailing 30-month median EBITDA multiples by acquirer type by half-year, 2016-2021

12x

10x 10.3x
8x 8.4x
6x

4x

2x

0x
1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

Strategic Financial

3 | 12 IT & Business Services M&A Overview 1H 2022

 Top acquirers – past 30 months

Top acquirers still strong in 2H2021

Prolific acquirer Accenture continued its acquisition
spree in 2H2021, acquiring a further 20 companies
within the six month timeframe and making 43 IT
Services acquisitions in 2021 alone. The company’s
acquisitions in 2H2021 fell into three categories: firstly,
firms operating within an IT vendor ecosystem such as
.
Acquisitions
Acquirers in 30 months
Microsoft, SAP, Salesforce, or AWS; secondly, IT
consultancies focused on horizontal technologies such
as cybersecurity; and finally, consultancies catering to
specific verticals such as manufacturing and digital
commerce.
Three most recent acquisitions

Headspring LLC software & consulting services

84 Tambourine Inc. Salesforce-based e-commerce SaaS development
ClearEdge Partners Inc. outsourced services

Arkphire Ireland Ltd. [dba Arkphire] Irish IT services

17 Coda Global LLC cloud consulting & managed IT services
Home Theater Technologies smart systems integrator

Devbridge Inc. software development services

16 TQS Integration Ltd. system integration & consulting
Magenic Technologies Inc. [fka Logicon.] Ltd. (assets) software development services

BIAS Corporation Oracle systems integration services

16 Ad2Pro [dba Madras Global] content & marketing automation services & SaaS
Sliced Tech Pty Ltd [fka Slice Tech Pty Ltd] managed & technical advisory services

Prime TSR LLC IT services

14 WrightCore Inc. IT managed & consulting services
LPA Software Solutions LLC data analytics IT services

Cloudreach cloud computing systems integration services

12 AppCentrica Inc. IT & management consulting services
Ideal Product Data Oy [dba IDEAL GRP] IT services provider

SXiQ Pty. Ltd. Australian network integration services

9 Phlyt Inc. cloud-native IT services
Rego (Adobe Workfront assets) Ltd. work management software consulting services

Activus Connect LLC outsourced call centre services

9 We Make Websites Ltd [aka WMW] website & IT services
Beris Consulting GmbH auto-focused IT services

Chainalytics Inc. supply chain technology consulting

7 Nexient LLC Agile software development services
Hashmap Inc. data warehousing consulting services

4 | 12 IT & Business Services M&A Overview 1H 2022

 Top trends in IT & Business Services

LARGEST DISCLOSED DEALS

• Private equity players continue to OF 2H2021
invest and acquire, accounting for 35% of $15 billion KKR & Co. takes private
all transactions in the sector in the past 15 Nov CyrusOne Inc. at 13x revenue and
30 months 27.6x EBITDA.

$10.1 billion American Tower Corporation

• Financial acquirers are paying out 15 Nov acquires CoreSite Reality
significantly EBITDA multiples, with the Corporation at 15.8x revenue and
31.3x EBITDA
trailing 30-month EBITDA multiple at
10.3x compared to 8.4x for their strategic $2.5 billion CDW Corporation acquires Sirius
counterparts 18 Oct Computer Solutions

• Managed services providers account $2.5 billion Dye & Durham acquires Link
21 Dec Group at 15.3x EBITDA
for 12% of all IT services transactions in
2H2021

$1.9 billion Sinch acquires Mailgun [dba

30 Sep Pathwire]
• Software development and
cybersecurity both remain highly sought-
after acquisition prospects, largely due to $1.8 billion Adecco acquires AKKA
the need to continue innovating and ensure 28 Jul Technologies at 1.3x revenue
enterprise security

$1.7 billion Huntington Ingalls acquires Alion

• Professional services firms continue 06 Jul Science and Technology
to make the most acquisitions, with Corporation
notable activity from Accenture and
Deloitte who are looking to serve all new $1.6 billion Concentrix acquires Prokarma
client needs in the cloud 22 Nov [dba PK]

5 | 12 IT & Business Services M&A Overview 1H 2022

 Data breakdown – geography and subsector

Integration IT Outsourced Services

Services Transaction processing, BPO, software
20% development, staffing, contract manufacturing
Tech & design, customer care.
Services &
Support Tech Services & Support
51% Tech & management consulting, web & email
marketing measurement, design.

IT Integration services
Outsourced Network integration, telecom integration,
Services systems integration, security integration.
29%

Tech Services & Support is the largest segment of the
IT Services sector, accounting for over half of all deals
in the past 30 months. However, companies in IT
Outsourced Services continue to attract the highest
.
valuations (12.1x trailing 30-month median EBITDA
multiple in 2H2021), compared to 6x or 8.6x in the
Integration Services and Tech Support & Services
segments, respectively (see subsectors pp. 6-8).

LAST 30 MONTHS
Headquarters of IT & Business Services targets Headquarters of acquirers of European targets

RoW
14% Europe North
71% America
24%

North
America Europe RoW
58% 28% 5%

Over the past 30 months, 58 per cent of all
transactions worldwide targeted a North American
company, compared to 28 per cent targeting a
European country. Meanwhile, 71 per cent of
.
European targets were bought by acquirers that were
also European, pointing to the continued importance
of regional deal-making and consolidation of market
share on the continent.

6 | 12 IT & Business Services M&A Overview 1H 2022

 IT Outsourced Services

Volume recovering, valuations stable

M&A activity in the IT Outsourced Services segment 12x 35x
33.1x
rapidly increased in 2H2021, with 131 deals inked 11.0x
30x
10x
compared to 90 deals in 1H2021. The trailing 30-
25x
month median revenue multiple came in at 1.4x, with 8x
20x
50% of all deals announced being in the 0.5x to 2.1x
6x
range. The lowest revenue multiple disclosed in 15x

2H2021 was 0.3x, while the highest was 3x. The 4x 11.6x
10x
trailing 30-month median multiple equaled 11.6x 2x 5x
1.4x
with 50% of all deals in the 9.5x to 15.2x range. The
0.1x 1.1x
0x 0x
minimum EBITDA multiple disclosed in 2H2021 was
Trailing 30-month Trailing 30-month
1.1x, while the maximum was 33.1x.
revenue multiple EBITDA multiple

200 190 191

176
164
155 150
149 149
150 141
126 129 131
119 121
112

100 90

50

-
1H 2014 2H 2014 1H 2015 2H 2015 1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

Walgreens BootsAllianceacquires CareCentrix

In October, Walgreens Boots Alliance announced a WBA, the acquisition is aligned with a new strategy to
majority investment in CareCentrix. The investment transform its core businesses and portfolio. Post-
gives Walgreens Boots Alliance majority ownership of acute care – specifically care that is delivered in the
CareCentrix, investing $330 million for 55 percent of .home, represents more
the company at an $800 million valuation, net of debt, than $75 billion in annual
with the option to acquire the remaining equity healthcare costs for
interests in the future. payers, providers, and Oct 2021
patients, and that total is ACQUIRED
CareCentrix, a home-centered platform coordinating $330 million
growing rapidly in the
care to the home for health plans, patients and
wake of the COVID-19
providers, provides outsourced transaction
pandemic.
management services, offering AI-enabled analytics for
healthcare cost efficiencies in the US. According to
..
7 | 12 IT & Business Services M&A Overview 1H 2022
 Tech Services & Support

High growth in subsector

M&A activity in the Tech Services & Support segment 10x 20.1x 30x 31.2x

grew 45% within the space of a year, with 538 deals

8x 25x
recorded in 2021 compared with 372 deals in 2020.
20x
While the trailing 30-month median revenue multiple 6x

was calculated at 0.9x, 50% of all deals were in the 15x

4x
0.5x to 1.4x range. The minimum revenue multiple
10x
8.8x
announced was 0.1x, while the maximum was 20.1x.
2x
5x
Meanwhile, the trailing 30-month median EBITDA 0.9x 3.1x
multiple came in at 8.8x. The lowest EBITDA multiple 0x 0.1x 0x

disclosed was 3.1x, while the highest was 31.2x. Trailing 30-month Trailing 30-month
revenue multiple EBITDA multiple
350
313

300

250 225
213
191 191 198
200 180 180 187
179 176 178 174
163 169
160
150

100

50

-
1H 2014 2H 2014 1H 2015 2H 2015 1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

Nordic IT Services targets Australiandistributor

In July, Crayon Group, a publicly listed, Nordic- opportunities. The firm operates as a VAR for various
headquartered IT Services firm backed by private software such as Microsoft, Citrix, MacAfee and
equity firm Norvestor, acquired Australian-based .Redhat, whilst also
value-added Reseller (VAR) rhipe in a deal valued at offering integration
$287 million. rhipe is a channel-focused, leading services for firms in
06 July
wholesale provider of subscription-based cloud Australia, New Zealand
ACQUIRED
licenses, infrastructure, and services. It was established and Asia. The deal had a $287 million

in 2003 and serves more than 3,000 IT resellers. The 4.9x revenue multiple
acquisition reinforces Crayon’s customer-centric and a 19.7x EBITDA
commitment to provide innovation and cost multiple.
optimization solutions to drive new growth
.
8 | 12 IT & Business Services M&A Overview 1H 2022
 Tech Services & Support (cont.)

Netcompany acquires private/public play It will also expand the reach and offerings in
Intrasoft
Netcompany’s private sector verticals, based on
In October, Netcompany, a Danish-based IT services
additional references and competencies added from
company providing business-critical IT projects,
Intrasoft in Telco, Banking and Finance, and Energy &
acquired Intrasoft in a deal worth $272 million.
Utilities. Finally, the deal
Intrasoft is a provider of IT services and core banking
supports Netcompany’s
software for businesses and governments, offering
platform approach by
consultancy, implementation and software October
adding supplementary
development in Europe. The acquisition of Intrasoft ACQUIRED
products in especially $272 million
will enhance Netcompany’s position in the public
Customs, Tax and Social
sector in Europe by adding presence across a number
Security, as well as for
of European countries markets and adding a leading
banking. projects
position in the EU Institutions market.

9 | 12 IT & Business Services M&A Overview 1H 2022

 Integration Services

Sub-sector overview
M&A activity in the Integration Services subsector 5x 15x

increased by 86% in 2H2021, with 93 deals inked 4.4x

compared to 50 transactions in a more subdued first 4x

half of the year. Closer analysis of the composition of 10x

3x
9.4x
30-month trailing median figures highlights that
revenue multiples have remained consistently at 1.1x
2x
since 1H2019, with the pandemic having negligible 5.7x
5x
impact. The minimum disclosed revenue multiple paid
1x 1.1x
out in 2H2021 was 0.3x, whilst the maximum totaled
1.3x
4.4x. 30-month trailing EBITDA multiples, on the 0.2x
0x 0x
other hand, saw a slight drop from 6x to 5.7x. Trailing 30-month Trailing 30-month
revenue multiple EBITDA multiple
140
124
120 111 109
105 105
98 96 99
95 93
100 89 91 90
86
76
80

60 50

40

20

-
1H 2014 2H 2014 1H 2015 2H 2015 1H 2016 2H 2016 1H 2017 2H 2017 1H 2018 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021

Professionalservices target Oracle integration data analytics and AI, which help maximise the
In the second half of business value for clients’ investments in Oracle Cloud.
2021, three of the main The acquisition is part of Accenture’s Canadian
professional services expansion strategy to support the cloud transition.
firms made acquisitions Jul 2021
in the Oracle systems ACQUIRED In August, KPMG acquired
Not disclosed
integration space. Certus APAC. Founded in
Leading the charge was 2014 and headquartered in
Accenture, which Australia, Certus is an Aug 2021
ACQUIRED
acquired Toronto-based Oracle implementation Not disclosed

Oracle Cloud implementation service provider partner specialised in the

Cloudworks for an undisclosed amount. Cloudworks’ delivery, training and
capabilities include robotic process automation (RPA), support of cloud services
.
10 | 12 IT & Business Services M&A Overview 1H 2022
 Integration Services (cont.)

to clients in various industries. According to KPMG, CDW Corporation acquires Sirius

Computer Solutions
the move, which will provide additional Oracle
In October, multi-brand provider of IT solutions,
specialist skills to its digital transformation and cloud
CDW Corporation acquired US firm IT systems and
services to clients in various industries, comes at a
network integrator Sirius Computer Solutions for
critical time for clients challenged with navigating their
$2.5 billion. Sirius Computer Solutions is a provider of
organisations through Covid.
storage, network and mobility, and security integration
Finally, in December, Deloitte acquired BIAS, a cloud services in the US. The
consulting firm in the Oracle Cloud Infrastructure acquisition is anticipated
(OCI) market with cloud professionals based in the to accelerate CDW’s
21 Oct
United States and India. Founded in 2000, BIAS product offerings and
ACQUIRED
capabilities focus on advise, implement and operate consolidate its value- $2.5 billion

services for cloud infrastructure, database, middleware, added reseller hardware

applications, analytics and security. This acquisition and software market
adds to Deloitte’s existing portfolio of Oracle cloud share.
application and infrastructure capabilities. Acquiring
the BIAS business also
allows Deloitte to serve
a broad portfolio of
clients including Dec 2021
emerging and enterprise ACQUIRED
Not disclosed
businesses that require
Oracle cloud migration
services.

11 | 12 IT & Business Services M&A Overview 1H 2022

 Conclusion & contacts

After a slightly subdued 1H2021, the second half of 2021 saw a stratospheric
increase in M&A activity, with growing transaction volumes and EBITDA multiples
rising to pre-pandemic levels.

The increase in deal volume perhaps comes as verticals dependent on the

expertise provided by the IT Services market reach an inflexion point: adapt to the
reorientation in market drivers or fall by the wayside. Additionally, with the Axel Brill
burdens of the pandemic on firms gradually receding, an increase in corporate Director, DACH
axel.brill@hampletonpartners.com
confidence in 2H2021 helped drive recovery in the sector’s deal volume.

Considering the data from the past 30 months, the median EBITDA multiple paid
out for IT Services companies surpassed covid figures, rising to 9.4x EBITDA.
Revenue multiples, meanwhile, came in at 1.2x, remaining steady since 2018.

The range of disclosed valuations metrics during the last 30-months was wide, with
the revenue multiple being as low as 0.1x and reaching highs of 20.1x. EBITDA
multiples show similar variation, with the lowest at 1.1x and the highest equalling Jonathan Simnett
33.1x. The wide variation in valuation multiples is resultant of a variety of factors Director, UK
jonathan.simnett@hampletonpartners.com
including growth rates, profitability, geography, domain expertise, service offerings
and perhaps the quality of the M&A process as well.

In 2022, we anticipate that transaction volume in the sector will plateau and that valuation metrics will either remain stable
or continue their upwards trajectory in the case of EV/EBITDA.

Selectionof Hampleton IT & Business Services transactions

acquired by acquired by acquired by acquired by acquired by

On-demand digital
content & social media
content agency with
over 200 employees
operating across North
America, the UK
High-performance
computing computer-aided
engineering managed
platform-as-a-service
(PaaS)
Certification services &
compliance testing of
gaming systems & gaming
industry vendors
UK-based provider of
business management
solutions based upon
Microsoft Dynamics ERP
and CRM product lines,
and related systems
integration and support
services
Vertical oriented IT
Services & solutions
vendor in the Nordics
focusing on banks &
insurance companies with
offices in Finland and
Sweden & over 230
employees

AboutHampletonPartners
Hampleton is at the forefront of international mergers and acquisitions advisory for companies with technology at their core.

Hampleton Partners’ experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled
international advice to tech entrepreneurs and the companies who 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: Automotive Tech, IoT, AI, FinTech,
High-Tech Industrials, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, IT Services, SaaS & Cloud, Insurtech and E-Commerce.

12 | 12 IT & Business Services M&A Overview 1H 2022

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Data Sources: We have based our findings on data provided by industry recognised sources. Data and information for this publication was collated from the 451
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