IT Services
Q1 2025 Update
Q1 2025 IT Services Landscape Overview
Key Trends + Insights
AI, ML, and Data + Analytics
• The rise of GenAI is reshaping the AI landscape and surpassing traditional approaches in many areas –particularly in Natural Language Processing, content generation, predictive modeling, and tasks requiring contextual reasoning As for GenAI’s impact on M&A, it has prompted some buyers to reassess targets’ exposure to transformation risk, and the onus will be on sellers to prove they can keep up with the cutting edge
• Due to the urgent need for firms to modernize data infrastructure, adopt AI, and consolidate fragmented data tools, there is soaring demand for data and analytics firms with specializations in Snowflake or Databricks, and expertise on these platforms is generating significant buyer interest
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Enterprise Software Partner Ecosystems
Demand for digital transformation firms consulting on and implementing enterprise software platforms such as Salesforce, NetSuite, and SAP remains elevated among both strategic and financial buyers As these platforms all regularly expand their offerings (with AI, industry-specific tools, and analytics), ecosystem partners can upsell services, cross-sell within their client base, and generally become embedded in multi-year transformation initiatives Large strategics are increasingly acquiring these firms to expand capabilities, increase revenue stickiness, and gain access to more long-term projects, while Private Equity firms are attracted to the growth and M&A roll-up potential
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Managed Services Providers (MSPs)
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MSP M&A demand continues, driven by the need to rapidly adopt new technologies as the pace of innovation accelerates and the growing priority placed on cybersecurity, cloud migration, and AI readiness. In turn, MSPs will need to implement AI into their own operations (such as GenAI-powered chatbots and proactive monitoring) to increase operational efficiencies and be set apart as top performers. In addition to these strong market tailwinds, MSPs are garnering Private Equity interest due to their recurring revenue models and the extensive opportunities for consolidation.
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Q1 2025 IT Services Landscape
IT Services Public Markets
Historical Index Performance
Additional Notable M&A Transactions
• March 2025 – CGI acquired Momentum Technologies, a Canada-based IT consulting services company specializing in data analytics and business intelligence
DATA & ANALYTICS
• March 2025 – WNS Limited acquired Kip.ai, a US-based leader in data modernization and democratization services focused on the Snowflake platform
• January 2025 – CGI acquired Novatec, a Germany-based IT services firm specialized in software engineering, digital products, and IT consulting services
DIGITAL ENGINEERING
ENTERPRISE SOFTWARE CONSULTING
• March 2025 – Veltris (backed by Trive Capital and BayLink Capital) acquired BPK Technologies, a US-based firm specializing in data engineering and customer software development solutions
• January 2025 – KPMG acquired LOYIC, a Spain-based company specialized in the implementation of SAP software for real estate asset management
• March 2025 – Kicksaw (backed by Rallyday Partners) acquired Skyvenn, a Canadabased Salesforce Summit Partner and a Certified Managed Services Expert
• January 2025 – Ridgemont Equity Partners invested in Strata Information Group, a US-based leading provider of managed services for higher education
MANAGED SERVICES
CLOUD SOLUTIONS
GOVERNMENT SOLUTIONS
• March 2025 – Blue Mantis (backed by Recognize) acquired three US-based firms focused on IT, networking, telecommunications, and managed services – TELigence Partners, Brevin System, and Calkins Networks
• March 2025 – Proact IT Group AB acquired BlakYaks, a UK-based consulting company with expertise in cloud transformation and automated Microsoft Azure solutions
• March 2025 – H.I.G. Capital acquired Quisitive, a US-based premier Microsoft Cloud and AI solutions provider
• January 2025 – Agile Defense (backed by Enlightenment Capital) acquired IntelliBridge, a leader in data analytics solutions for the federal government
• January 2025 – Alpha Omega acquired Macro Solutions and SeKON, both federal government consultancies focused on technology and IT modernization
• February 2025 – Agellus Capital acquired US-based CompassMSP and intends to combine it with US-based MSP Blackpoint, which it acquired in September 2024
• March 2025 – Rockbridge Growth Equity completed a majority investment in Access Global Group, a US-based Salesforce-focused solutions and services company
Q1 2025 IT Services Landscape Overview
Q1 2025 Recap / 2025
Outlook
While it wasn’t the start to the year many had hoped for, IT Services saw a very healthy and steady level of M&A activity in early 2025 Quarterly transaction volumes were down slightly, and valuations broadly trended sideways (maybe a touch cooler – but generally stable). Despite the macroeconomic overhang, Private Equity buyers deployed capital across cloud solutions, enterprise software ecosystem partners, cybersecurity, and digital engineering. Strategic buyers remained active, albeit very focused on investments that stringently align with commercial and growth priorities.
Top-Tier Assets
~$15-20M+ of Revenue
40%+ Gross Margins
Strong and Growing Sales Pipeline, etc.
Nearshore Delivery Resources
Diversified Client Base
20%+ YoY Revenue Growth
Technical Breadth and Depth
Attractive End Market Focus: Financial Services, Healthcare, Education, Government
Enterprise Client Credentials
High Revenue Visibility
AI (particularly the rise of GenAI and agentic AI), the ongoing need for cloud and data infrastructure optimization, and evolving cybersecurity threats are a few of the key forces we expect will drive strong IT Services M&A exploration and momentum for the rest of 2025 (and beyond). Industry- and client-specific solutions, especially in highly-regulated sectors, are garnering significant market attention.
Top considerations for Strategic buyers will continue to be business expansion (customers, capabilities, geography), cross-sell opportunities, technology partnerships, and delivery models. Private Equity buyers will continue to seek out differentiated assets that can be scaled both organically and inorganically – and also think creatively about entry points into the sector. For example, in the MSP space, rather than starting with a single platform of size as the centerpiece for a roll-up strategy, some financial investors are going downstream and bringing together a collection of smaller assets to create that initial platform.
HVA IT Services Expertise
About Harbor View Advisors
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