IT Services + Digital Transformation
Q4 2025 Update
Q4 2025 Key Trends + Insights
AI, Data + Analytics, & Digital Engineering
Buyers are accelerating acquisitions of AI-, data-, and digital-engineering services firms to bridge the widening gap between enterprise ambitions for AI and the talent, capabilities, and operating scale required to execute them Demand has shifted decisively away from experimentation toward AI embedded in mission-critical systems, especially in regulated and data-intensive industries such as financial services, government, and healthcare. Acquirers are prioritizing firms with deep data engineering foundations, industry-specific accelerators, and repeatable delivery models over pure consulting and advisory. Notably, many acquired firms blend proprietary platforms, automation IP, and managed services, enabling recurring revenue and differentiation versus traditional Global Systems Integrators. This trend reflects both defensive positioning against AI-native disruptors and offensive expansion into highermargin, stickier services by strategic buyers.
Received a Strategic Investment from
Acquired by
Received Series A Funding from
Managed Services Providers (MSPs) & Cybersecurity Providers
Acquired by
The growing demand for managed IT that is tightly integrated with advanced cybersecurity practices and cloud infrastructure capabilities is driving consolidation in the market as MSPs race to build scaled, security-first platforms Increasing regulatory scrutiny, cyber risk, and operational complexity are driving customers toward fewer, more accountable partners with compliance expertise Companies with strong Microsoft, cloud security, and regulated-industry credentials are likely to command premium interest. Cybersecurity providers are also acquiring MSPs, creating value by embedding security directly into daily IT operations and increasing wallet share Private Equity investors continue to assemble platforms that utilize M&A to gain integrated cloud infrastructure, managed IT, and cybersecurity offerings. Acquired by
Received a Majority Investment from Acquired by
Received a Strategic Investment from
Enterprise Application / Hyperscaler Ecosystem Partners
Global consultancies and other strategic acquirers are aggressively consolidating ecosystem partners to secure technical talent, certifications, and market share within dominant enterprise platforms such as Salesforce, Microsoft Azure, and SAP Clients increasingly desire integrated solutions that combine implementation, data, AI, and ongoing managed services, pushing buyers to deepen both technical breadth and delivery capacity Salesforce and Microsoft ecosystems are emerging as especially active consolidation hubs, driven by rapid platform innovation (e g , Agentforce, Data Cloud, Azure AI) and the need for partners that can translate these capabilities into measurable business outcomes.
Q4 2025 By The Numbers
IT Services
M&A Activity – Deal Count by Quarter
While overall deal volume in Q4 decreased by approximately 4.8% compared to Q3, the aggregate deal value increased significantly, driven by a sharp resurgence in megadeals
Q4 2025 Public Markets
Share prices began to rebound in Q4 2025 and remain elevated relative to historical levels – this roughly mirrors the recovery seen in valuations, which we expect should continue to improve throughout 2026
Q4 2025 Additional Notable M&A Transactions
• October 2025 – Artefact (backed by Ardian and Cathay Capital) acquired Finor, a Brazil-based data & AI consulting firm specialized in the financial services sector
• November 2025 – Huron (NASDAQ: HURN) acquired the payor consulting services division of AXIOM Systems, which offers data analytics and digital transformation capabilities that are specialized to the payor ecosystem
DIGITAL ENGINEERING
• October 2025 – Accenture (NYSE: ACN) acquired Decho, a UK-based technology and AI consultancy with advanced engineering capabilities for Palantir software
• October 2025 – ANS Group (backed by Inflexion) acquired Sci-Net Business Solutions, a UK-based technology consulting firm and Microsoft Gold Partner offering AI, cloud, software development, and digital infrastructure solutions
• October 2025 – Avesi Partners made a strategic investment in Mosaic Consulting Group, a US-based provider of UKG-focused consulting and managed services
• October 2025 – TCS (NSE: TCS) acquired ListEngage, a US-based Salesforce-exclusive digital marketing agency and consulting partner with expertise across Salesforce Marketing Cloud, Data Cloud, and Service Cloud for $72.8M CLOUD
• November 2025 – Thrive (backed by Court Square Capital Partners and Berkshire Partners) acquired Worksighted, a US-based MSP with a focus on cloud security
• November 2025 – Corsica Technologies (backed by Inverness Graham) acquired AccountabillT, a US-based MSP known for its cybersecurity and Microsoft expertise
• October 2025 – Caylent (backed by Gryphon Investors) acquired Trek10 Inc., a USbased AWS Premier Tier Services Partner
• September 2025 – RKON Technologies (backed by Post Capital) acquired ScaleSec, a US-based provider of cloud security and compliance services
• November 2025 – Markon (backed by Sterling Investment Partners) acquired PLEX, a US-based provider of cybersecurity and AI services for government and defense clients
• December 2025 – Synergy ECP (backed by Falfurrias Capital Partners) acquired NetCentrics, a US-based provider of IT modernization and cybersecurity services for defense and intelligence agencies
• November 2025 – Tenex Capital Management made a growth investment in Sentinel Technologies, a US-based provider of network infrastructure services, managed services, and managed security services
• November 2025 – Veritas Capital acquired MetroStar Systems, LLC, a US-based AIenabled digital transformation services and software provider
Q4 2025 Recap + 2026 Outlook
The IT Services M&A landscape evolved from a cautious “flight to quality” strategy in Q3 2025 to the emergence of mega-deals in Q4, enabled in part by a meaningful easing of trade-related headwinds. While deal volume in Q4 decreased from Q3, total transaction value increased, driven by large strategic investments in AI, cloud, and cybersecurity infrastructure. IT spending in 2025 exceeded initial forecasts, and the outlook for 2026 is robust, with global IT spending expected to grow 10.8% to approximately $6.15 trillion. This growth underscores a fundamental shift: digital transformation investment is transitioning from discretionary to mission-critical. Enterprises are moving beyond proof-of-concept initiatives to embed AI into core workflows capable of autonomously managing complex business processes. And with the pace of innovation accelerating, organizations are increasingly compelled to acquire capabilities they cannot build quickly enough in-house, fueling M&A activity
Private Equity investors are well-positioned to deploy capital in 2026, with anticipated interest rate easing expected to narrow valuation gaps between buyers and sellers and further support M&A activity. Investor appetite for IT Services platforms continues to increase, including among sponsors that have not historically focused on the sector This interest is particularly concentrated in businesses serving highly regulated end markets, generating recurring revenue, and offering meaningful exposure to automation and AI. Private Equity firms are also increasingly creative in their approach to market entry, such as aggregating smaller assets to build scalable platforms that can support long-term roll-up strategies.
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