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Q3 2017 Information Technology Industry Spotlight

INSIGHT ARTICLE

Q3 in review:  Information technology deals data, analysis and more

The information technology (IT) industry is currently creating the most change, and as a result, is staying the most relevant for all types of investors and fueling robust mergers and acquisition (M&A) activity. Consolidation is becoming a key factor in the industry, as the increasingly successful adoption of cloud-based services has encouraged considerable consolidation in the services and software sectors. This is reflected in the transaction volume for the software sector, which has grown significantly the past two years.

High asset prices continue to affect M&A activity and consequently, private equity (PE) firms are looking to be even more selective on the buy side, while grooming and taking their best-prepared tech businesses to market to enjoy the current seller’s market for the upside. These pricing pressures are also contributing to more buy-and-build strategies. Many PE firms are rationalizing currently high valuations on a platform acquisition by lining up possible add-on targets to drive revenue and EBITDA growth. Given this, add-ons will likely remain quite popular for the foreseeable future.


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