Digital Services M&A Report:
Digitalisation drives deal activity in the IT sector

February 2025 – M&A trends, valuation multiples and transactions in the Digital Services sector.

Personal Note: Digital Services: Key Digitalization Trends Drive M&A Activity

RLooking back on 2024, the global economy showed cautious optimism after the turbulence of the past few years. While inflation and interest rates have moderated, economic uncertainty persists. Despite these challenges, investor sentiment has shown signs of recovery, with confidence returning to markets.

The IT Services sector – comprising IT Consulting, Software Development, and Other IT Services – continues to thrive, with global revenue projected to reach $1.9 trillion by 2029. This growth is fueled by advancements in AI, increased cloud adoption, and the rising demand for automation and cybersecurity solutions. As businesses strive to modernize operations and stay competitive, digital transformation remains a strategic imperative, despite ongoing economic pressures.

Arne Tödt

Managing Partner ARTHOS
Expert in Digital Services & Software

arne.toedt@arthos.de

Notable recovery in Digital Services deal volumes & value since Q2 2023

M&A activity in the IT Services sector rebounded in 2024 after a slowdown, driven by multiple large transactions from both financial investors and strategic buyers. Notable deals include EQT Private Capital Asia’s acquisition of Perficient and SoftwareONE’s acquisition of Crayon Group, both in the second half of 2024. This resurgence was fueled by trends in digitalization – such as AI, cloud-based services, and the Internet of Things – as well as a stabilizing economy. With easing interest rate concerns and softer regulatory scrutiny, investor confidence returned. Looking ahead to 2025, continued consolidation is expected as corporate buyers and private equity investors compete for strategic positions in an ever-evolving landscape.

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Grafik über: Spürbare Erholung von Deal-Volumen und -Werten im Digital-Services-Sektor seit Q2 2023

Pitchbook (as of 14 February, 2025)

Digital Services index upward trend driven by Software Development and Other IT Services Companies

IT service providers are well-positioned to benefit from strategic partnerships and growing demand for digital modernization. With current market conditions favoring exits, especially in high-growth areas such as AI, data analytics, and cloud services, business owners are faced with unique opportunities. Given the complex and fast-changing competitive environment, we strongly advise owners to partner with an experienced technology M&A advisory firm to maximize the outcomes of their transactions.