IT Services
H2 2024 IT Services Landscape Overview
Key Trends + Insights
AI, ML, and Data + Analytics
As companies of all sizes explore AI use cases and AI-driven industry-specific solutions, demand is only intensifying for the relatively small universe of specialists that have the comprehensive skill set to develop and support successful model builds over the long term:
• Can modernize tech stacks in the cloud to the extent necessary + full-spectrum data science
• Deep expertise with respect to Traditional and Modern AI tools and techniques, as well as the expanding Generative AI frontier
• Ability to consult on holistic AI and data strategies that drive tangible business value + digital engineering capabilities to customize applications for clients
The SAP Ecosystem
SAP cloud consulting and implementation partners are attracting widespread attention given SAP’s plans to end support services for SAP ECC in 2027 and the significant backlog of customers that still need to transition to S/4HANA. Both Strategic and Private Equity buyers are aggressively pursuing consultancies well-positioned to capitalize on the evolution of SAP’s product suite – especially healthy, growing, and profitable firms focused on S/4HANA, SAP Business Technology Platform (BTP), and SAP Business Data Cloud (BDC)
Managed Services
Market interest in MSPs / MSSPs is quite sustained, as IT environments become more and more complex and businesses increasingly rely on outside partners to manage resources, implement new technologies, and fortify networks and access points against constantly-proliferating cyber threats. With recurring revenues, high potential for customer spend growth, and strong buy-and-build feasibility, MSPs / MSSPs continue to be attractive investments, especially for Private Equity firms.
H2 2024 IT Services Landscape Overview
IT Services Public Markets
Additional Notable M&A Transactions
• July 2024 – Harvest Partners-backed Sparq acquired Amplify Consulting Partners, a US-based, data-first IT consulting firm
DATA & ANALYTICS
• August 2024 – Carlyle-backed HSO acquired Aware, a New Zealand-based data and AI solutions firm
DIGITAL ENGINEERING
ENTERPRISE SOFTWARE CONSULTING
• October 2024 – EQT-backed Indium acquired Experion, an India-based, AI-driven digital engineering company
• November 2024 – Sunstone Partners invested in KMS Technology, a US-based provider of digital engineering, data, and AI services
MANAGED SERVICES
• September 2024 – IBM acquired Accelalpha, a US-based global Oracle specialist
• October 2024 – VSS Capital Partners completed a growth capital investment in Lane Four Consulting, a US-based Salesforce consulting partner
CLOUD SOLUTIONS
• July 2024 – FFL Partners completed an investment in Medicus IT, a US-based leading provider of healthcare-focused IT managed services
• September 2024 – Recognize completed a majority investment in Blue Mantis, a USbased premier IT solutions and managed services provider. The former majority investor, Abry Partners, will continue as a minority investor alongside Recognize.
• November 2024 – NTT Data acquired Niveus Solutions, an India-based Google Cloud services provider
• December 2024 – CDW acquired Mission Cloud Services, a US-based AWS cloud services, managed services, and consulting partner
GOVERNMENT SOLUTIONS
• September 2024 – CGI Federal, a subsidiary of CGI Inc., acquired Aeyon, a US-based provider of digital transformation and AI technologies for the US federal government
• September 2024 – CM Equity completed an investment in Sabre Systems, a US-based provider of software solutions to the US government in support of national security
• July 2024 – Avance Investment Management completed a strategic investment in Alchemy Technology Group, a US-based VAR and provider of SaaS solutions
• November 2024 – Apax Partners acquired Thoughtworks, a US-based IT consulting firm in a public-to-private transaction
H2 2024 IT Services Landscape Overview
2024 Recap / 2025 Outlook
The AI era of digital transformation continues to energize the IT Services M&A landscape, and transaction volumes are broadly improving. However, buyer and investor caution and selectivity persist. Top-tier assets are still garnering the most engagement and seeing the best transaction outcomes (competitive valuations that hold up during a sale process, minimal due diligence headaches, reasonable timelines to close, etc.).
Top-Tier Assets
~$15-20M+ of Revenue
20%+ YoY Revenue Growth
40%+ Gross Margins
Technical Breadth and Depth
Strong and Growing Sales Pipeline, etc.
Attractive End Market Focus: Financial Services, Healthcare, Education, Government
Diversified Client Base
High Revenue Visibility
In 2025, we see 2024’s key trends only accelerating and overall activity picking up even more as the macroenvironment continues to stabilize. Strategic and PE-backed strategics will continue to actively consolidate, filling gaps in existing capabilities and building out additional offerings to drive customer retention, customer spend growth, and new customer acquisition.
Private Equity buyers will continue to think creatively about entry points into the sector – leveraging relationship networks and operating partnerships, as well as optimizing diversified or transitioning business models (e g , scaling a VAR that also offers a meaningful portion of services). IT training is another sub-sector area where we see increased interest – with quickening technology cycles and ongoing skillset shortages, there is a growing need for high-quality professional education and certification services.
HVA IT Services Expertise
About Harbor View Advisors
Operating at the intersection of investment banking and management consulting, we partner with inspiring companies and private equity firms to help them design and execute their strategies for growth or exit. With decades of successful client outcomes, we help growing teams improve their opportunities for success. We provide Sell-side advisory, Buy-side advisory and Strategic Consulting to innovative companies and financial sponsors.
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Harbor View Advisors does not guarantee the accuracy or reliability of any data provided from third party resources. Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.