Exploring M&A and Growth Capital Trends in the UK IT Services Sector
The UK economy has been facing challenges such as high interest rates, rising prices, and global social-political uncertainty. However, the IT services sector has remained resilient and continues to attract investors and raise funds. In the last 18 months, the volume of IT services M&A has not been significantly impacted by these external factors.
According to data from Moore Kingston Smith Corporate Finance, the IT services sector is expected to deliver strong figures for deal volume in 2024. Deal numbers have remained steady, with over 260 deals recorded in Q1 FY24, raising capital of £505m. IT managed services deals have been a significant portion of the transactions, with a focus on cloud-based services.
One notable trend is the increasing involvement of private equity in IT services M&A. Private equity firms are seeking to deploy significant amounts of capital into the sector, with a high percentage of deals being PE-backed. This trend provides founders and owners with opportunities to either exit or take their businesses to the next level.
A recent example of this trend is the investment in 2i Testing by Rockpool. 2i Testing provides quality engineering services for digital transformation and has seen exceptional growth. Private equity firms like Rockpool are interested in the IT services sector due to its resilience, growth potential, scalable business models, diverse product offerings, innovation, and attractive exit strategies.
If you are considering exiting your IT services or tech business, you can learn more about successful tech business exits at an upcoming panel and networking event hosted by Moore Kingston Smith. The event will feature speakers from successful tech companies who have recently completed acquisitions or exits. It is a great opportunity to gain insights and network with industry experts.
Overall, the IT services sector continues to show strength and resilience in the face of economic challenges. Private equity firms are increasingly interested in investing in the sector, providing opportunities for growth and expansion. If you are looking to exit or grow your IT services business, now may be the right time to explore your options.
