2021 was a record year for M&A in the IT services industry. There were 47% more deals in 2021 than in 2020, and the value of those deals was up 63%. Excess capital saved up during the pandemic, low interest rates and strong demand for digital transformation capabilities were the key drivers that led to this record-breaking year.
Accenture, Deloitte, IBM, Atos and Tech Mahindra were the most active in 2021; they primarily targeted other IT services firms (see Data Watch). Within this segment we’re primarily talking about cloud engineering, cybersecurity and analytics – capabilities that are in super high demand as companies accelerate their digital transformation initiatives.
And let’s not forget about the role of private equity in technology M&A. In 2021, PE firms accounted for seven $1B+ transactions. For example, KKR acquired ISG Leaderboard provider Ensono; I Squared Capital acquired KIO Networks, Mexico’s largest data center operator; and just before the end of the year, Advent International acquired digital engineering firm Encora.