Comprehensive analysis of the deal activity in the technology services vertical in 2024 across key sub-markets.
In brief
- Enterprise tech M&A hit 857 deals in 2024, up from 722, with values rising to US$32.2 billion, driven by PE participation and large transactions.
- PE-backed deals rose to 55%, with roll-ups at 38% (up from 25%). Take-private deals surged as PEs capitalized on attractive valuations.
- Enterprises focused on digital transformation, investing in app modernization, data, analytics, GenAI, and PE-backed cloud and data acquisitions.
With expectations of a potential revival in IT spending growth and discretionary spend budgets, the macro environment for enterprise tech remained largely unchanged in 2024 compared to 2023. While vendor consolidation and cost takeouts were key themes for M&A deals in technology services in 2023, we noted some stabilization in 2024 with early signs of recovery in select industry pockets. Deal activity, however, rebounded significantly in 2024, rising to more than 850 deals compared to approximately 720 in 2023. Deal values also saw a marked increase from US$7 billion in 2023 to US$30 billion in 2024.
Private equity participation supercharged both deal volume and value. PE roll-up and direct deals accounted for 55% of all transactions, up from 45% in 2023. The year also saw large deals returning to the fold, with approximately 10 deals exceeding US$500 million, compared to just 4 in 2023. Weakness in global public markets prompted several take-privates across the globe as PEs took advantage of attractive entry points in scaled digital players. PEs also led mid-market consolidation, with roll up activity rising from 25% in 2023 to 38% in 2024, driving overall deal activity to its highest levels in four years.
Deal activity within the listed IT services universe remained range-bound at approximately 55 deals in 2024, compared to 46 deals in 2023. However, several bold bets were placed by the digital natives, mid-caps, and large-caps, indicating the criticality of inorganic imperative in an otherwise growth starved environment.
Overall, we continue to see the digital transformation megatrend driving both strategic and sponsor-led deal activity. With lack of a line of sight on discretionary spend recovery, the year was shaped by current digitization priorities of enterprises and SMBs, including sustained momentum in the application modernization theme across SAP, Oracle, ServiceNow, etc. Demand for AI and data analytics continued to be exceptionally high. With the GenAI imperative expected to drive investments in enterprise data and AI stack, service providers globally are seeking to build and scale their data practices. The year recorded one of the largest deals in the segment over the last two years, including Impetus Technologies' US$350 million strategic partnership with Kedaara Capital.
EY's analysis of M&A deals in technology services in 2024 provides valuable insights into buyer strategies, key acquisition themes, and public market valuations trends. We hope you find this report insightful, engaging, and thought-provoking. As always, we look forward to your feedback and suggestions.
Download the full pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
