- $ 5 trillion threat of cyber-attacks and data theft encourage investment in cyber security solutions, talent and technologies 
- IT modernisation – plus cloud technology, IoT, virtualisation and robotics – driving deals to maintain competitiveness and reduce capital expenditure
London, UK – 19 September 2019 – Hampleton Partners’ latest global IT & Business Services M&A Market Report reveals that the sector’s total disclosed deal value reached a whopping $ 97 billion in 1H 2019 – the highest total on record for a six-month period.
Hampleton Partners, which specialises in international technology M&A and corporate finance, also noted a significant rise in valuations, with overall median disclosed deal amount reaching $ 43 million in 1H 2019, up from $ 23 million in 2H 2018.
Deal volume lessened, with 370 transactions inked compared to 432 in 2H 2018. However, trailing 30-month median multiples remained within the high end of their respective range, with EV/EBITDA inching up from 9.9x in 2H 2018 to 10.1x in 1H 2019. Revenue multiples came in at 1.2x from 0.9x in 2013, signaling steady growth over the past six and a half years.
Miro Parizek, founder and principal partner, Hampleton Partners, said: “All companies are under continual pressure to update their software, cyber defense, IT infrastructure and outsourcing strategies. This is being driven by the need to reduce capital expenditure, modernise to unleash operational efficiencies and take a proactive stance against cyber-attacks and data theft.
“The move to the cloud and growth in technologies such as IoT, robotics and virtualisation mean that the IT services market will deliver a strong performance over the next few years as spending levels increase.
As for M&A, strategic buyers are looking to acquire the talent and tech they need to compete, and private investors see the opportunity to apply their expertise and invest their capital for higher returns.”
A call to cyber arms
During 1H 2019, the ‘Big Four’ firms snapped up cyber security firms to strengthen their own cyber defense divisions.
Accenture published a report suggesting that companies around the world could lose $ 5.2 trillion over the next five years to cybersecurity breaches. Unsurprisingly, Accenture bought ‘Security of Things’ firm Deja vu in June, to acquire expertise in protecting connected devices and IoT networks against malicious threats. Competitor KPMG is following a similar strategy, having purchased Swedish cybersecurity firm Everdon to grow its own advisory business.
Key trends in IT & business services
Payment outsourcing booms – By outsourcing payment processing, banks can increase efficiency, reduce costs, and focus their efforts on competing with digital-first entrants such as Monzo. Transaction processing is therefore a hot market – one that is set to reach a market value of $ 3 trillion per year in revenue by 2023 (according to McKinsey).
Fidelity National Information Services struck the biggest deal to date in the electronic payments industry with the purchase of Worldpay for around $ 46 billion. Close behind, US-based Fiserv bought payment processor First Data Corp for $ 22 billion.
Cloud computing – The move to the cloud continues to offer increased efficiency to companies, especially when combined with outsourcing. A spate of acquisitions in outsourced HR, logistics and administration is underway: for example, private equity firm Lightyear Capital agreed to acquire Engage PEO, which provides HR outsourcing solutions to small and midsize businesses across the US.
IT Consultancy – Representing roughly 20 per cent of the total global consulting market, the market for technology and IT consulting services is estimated to be worth $ 48 billion. The integration of big data, cloud, robotics and IoT into more business sectors will continue to drive that trend.
The future of IT & business services
Miro Parizek concluded: “Given the current economic climate, we may witness a brief pullback on the speculative IT project investments customers are currently running. However, we believe there will be continued pressure on many enterprises to not only maintain, but accelerate, efficiency-related IT investments aimed at improving internal processes, digital commerce, supply chains, and so on.”
 Accenture Cybercrime Research: https://www.businesswire.com/news/home/20190117005195/en/Cybercrime-Cost-Companies-US5.2-Trillion-Years-New
Note to Editors:
Hampleton Partners’ IT & Business Services Market Report 2H 2019 is compiled using data and information from the 451 Research database (www.451research.com) and from CapitalIQ, a product of S&P Global.
Download the full Hampleton Partners’ IT & Business Services M&A Market Report: https://www.hampletonpartners.com/reports/it-business-services-report/
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, IoT, AI, Fintech, Hi-Tech Industrials & Industry 4.0, Cybersecurity, VR/AR, Healthtech, Digital Marketing, Enterprise Software, SaaS & Cloud and E-commerce.
For more information visit https://www.hampletonpartners.com