Digital Services M&A Report:
Software Development & IT Services – buyers pay for business models

Q3 2026 – M&A trends, valuation multiples and transactions

Personal Note: Software Development & IT Services: Valuations recover and buyers pay now for business models, not for IT-subsectors

While the macroeconomic backdrop in Europe and Germany remains demanding, equity markets have looked through the noise. After a pronounced de-rating on AI disruption fears, culminating in the February 2026 sector sell-off, Software Development and IT-Services Companies have rebounded by approximately 10% in recent months with NTM EV/EBIT multiples recovering from ~9x in July to ~10x in September. On 1 October, Accenture reported quarterly revenue above its June guidance – a sign that AI is reshaping demand, not eroding it.

Arne toedt Kontakt Bild

Arne Tödt

Managing Partner ARTHOS
Experte für Digital Services & Software

arne.toedt@arthos.de Linkedin
Digital Services sub-sectors diverge: Software Development & IT Services recovered while IT Consulting trade still well below its peak
Graph: Digital Services sub-sectors diverge: Software Development & IT Services recovered while IT Consulting still trades well below its peak
Notes: All indices have been rebased to 100 as of 01 June 2024; Companies within ARTHOS indices were capped at 15% as of 01 June 2024, with excess market capitalisation proportionally redistributed Sources: Capital IQ (as of 30 September 2026)
Digital Services stocks recovered in Q3 2026 on an improved growth outlook, supporting M&A conditions after AI-driven share price pressure
Graph: Software Development & IT Services: Digital Services stocks recovered in Q3 2026 on an improved growth outlook, supporting M&A conditions after AI-driven share price pressure
Sources: Capital IQ (as of 30 September 2026); Mordor Intelligence Report, Gartner press release

The M&A market never closed. Digital Services deal value rose 83% year-on-year to €33bn in H1 2026 – on fewer, but larger transactions – and strategic buyers continued to pay for capabilities: Accenture acquired Faculty (400+ AI engineers), VINCI Energies launched a bid for All for One, Persistent for Nagarro, Bridgepoint acquired iC Consult for €450m, Vodafone bought Skaylink for ~€180m and Synova chose Allgeier IT Services as a German buy-and-build platform. Many of these targets are Mittelstand-sized specialists.

Digital Services M&A deal value rose 83% YoY to €33bn in H1 2026, albeit on fewer, larger deals
Graph: Digital Services M&A deal value rose 83% YoY to €33bn in H1 2026, albeit on fewer, larger deals
Sources: Capital IQ (as of 30 September 2026) Note: M&A transactions reflect selected deals. M&A metrics are based on closed and announced transactions *Q3 2026 shows a distorted deal value and number of deals due to delayed data provision in Capital IQ

What has changed is what buyers pay for. In the AI era, the market no longer prices IT service companies, it prices business models.

Areas that drive growth and command a premium today: recurring, contract-backed managed service revenue, deep platform and vertical expertise, legacy renovation, cybersecurity, and proven AI-enabled delivery that shows up in margins, not merely in fewer billable hours. Pure time-and-material capacity without differentiation faces margin pressure and a valuation discount.

For owners, two conclusions follow:

  1. First, waiting for the index to recover is not a strategy: the strongest outcomes are achieved by companies that prepare their equity story 12–24 months ahead of a process.
  2. Second, strategic buyers have become flexible on structure: staged transactions and earn-outs are now common, letting owners share in the upside their business generates inside a larger platform – rather than selling that future at today’s multiple.

For more insights, valuation multiples, and notable transactions, sign up for our M&A Digital Services Newsletter to access the ARTHOS Digital Services M&A Report Q3 2026 with a focus on Software Development & IT Services.

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