Sponsored · Whitepaper

Information Technology Industry Spotlight Report

As more financial sponsors look to make inroads into the technology sector, and tech giants boast massive cash reserves that some are looking to repatriate, investing in not only organic growth initiatives but additional acquisitional growth will continue to power the IT M&A cycle going forward. However, the heights observed during recent years are unlikely to be achieved overall, as prices have simply risen too high for many to justify. Accordingly, newer equilibria will be reached via the typical supply and demand dynamic, with the potential for outlier purchases of highly valued late-stage startups boosting aggregate M&A value in coming years.

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Key findings:

  • Although more resilient than other sectors, mergers and acquisitions (M&A) volume within the information technology (IT) sector finally began slowing in 2017, although aggregate deal values remained historically healthy.
  • Record-high transaction multiples for IT companies are deterring speedy closes and incentivizing greater diligence on the part of prospective acquirers, contributing to diminishing volume.
  • A significant jump in debt to EBITDA ratios enabled that rise in overall EBITDA multiples.
  • Private equity (PE) buyers are propelling overall M&A more than ever before, accounting for well over 30 percent of all IT M&A volume in the final quarter of 2017.

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