So far in 2023 there has been a drop in M&A deals, but the market is still ripe for certain acquisitions.

“What we’re seeing in 2023 is a return to pre-COVID. It’s not a crisis or anything, it’s just really returning to pre-COVID levels,” John Holland, managing director of Corporate Finance Associates, told CRN. “Eventually, interest rates go up and the credit conditions tighten. The party can’t go on forever.”

Laguna Hills, Calif.-based Corporate Finance Associates is an investment banking firm with decades of experience in executing mergers and acquisitions in the IT and telecom services industries.

Despite the drop, some businesses, including MSPs, solution providers, telecom and cybersecurity companies, were not affected. There was, however, an absence of mega deals.

“Managed service providers have recurring revenue, they’re considered safe even in a recession because the MSPs really wrap their arms around their clients,” Holland said.

Now that conditions are tightening and interest rates are rising, acquirers are being more selective, according to Holland. They’re searching for particular types of IT services companies that they think are more attractive by offering more growth potential.

Businesses that are riskier in this economic climate are VARs as they work on a project-by-project basis and typically have lower margins, he said. However, a “very safe” category is resellers that sell to the government because the government continues to buy, whether there is a recession or not.

One such company that continues to land M&A deals is Dublin, Ireland-based Accenture, which has acquired eight companies so far in 2023. Another is The 20 MSP, which has acquired seven.

While many companies are being strategic, a handful only acquired one to two companies, but that could change.

“Banks are just more conservative lenders,” Holland said. “So non-bank lenders are very conservative now too. They’re only going to provide a loan for an acquisition if it’s a quality company that’s being acquired. That just has the effect of eliminating M&A transactions of businesses that are not rock-solid. I think that we’re going to see this state of M&A for a little while. It could be another quarter, it could be the rest of the year. That’s hard to say.”

From New Charter Technologies to Coretelligent to Intelligent Technical Solutions, here are the 15 biggest MSP and solution providers M&A deals in 2023 so far.