UK IT services deal activity picked up in Q3 2023, with investors “cutting short their summer holidays” to snap up the market’s prospects.
That’s according to accountancy firm Moore Kingston Smith, whose index recorded 158 UK IT services deals during the quarter – up 10% on Q2.
According to Canalys, the number of M&A deals in the global IT channel is set to fall 60% in 2023 as private equity backers pull in their horns.
Moore Kingston Smith – whose index covers the wider IT services and tech sector – reported a dip in UK deals in Q2 as acquirers exhibited caution in the face of rising interest rates and high inflation.
Its Q3 data revealed a “turnaround in the market”, however.
“The summer months often see less activity but it appears that investors in the UK IT services sector cut their summer holidays short this year, tempted back by the market’s prospects,” the accountancy said.
Deal makers
In the MSP space, Croft Communications made four acquisitions in Q3, bringing its 2023 deal total to eight, Moore Kingston Smith noted.
Private equity-backed investments accounted for 63% of all IT services deals completing in Q3, up from 60% in Q2 but down on 2002 levels.
Recent PE investments include FPE Capital’s buy-out and merger of two Oracle Netsuite partners – NoBlue and Elevate2 – and subsequent acquisition in September of another NetSuite partner, BrightBridge Solutions, Moore Kingston Smith observed.
“We are delighted to see an increase in the number of deals done in Q3, in what is traditionally a somewhat quieter quarter,” Moore Kingston Smith Partner Nick Thompson said.
“Investors do face economic challenges but clearly the positive outlook for the sector as a whole means they are willing to face these challenges down, so as not to miss out on opportunities.”
