IT M&A Expert: Over $5 Trillion In Transactions Completed In 2021

IT M&A Booming 

Mueller, citing a study by PricewaterhouseCoopers, said M&A activity in the IT space in 2021 was up by over 50 percent compared with 2020, with over $5 trillion in transactions completed in 2021 versus $3.8 trillion in 2020.

“We haven’t seen numbers like this really since 2007. ... [And] we’re still very bullish on the marketplace, even with rising inflation, interest rates, the Ukrainian invasion and other world geopolitical events,” he said.

A primary reason why 2021 M&A activity was so strong was easy access to capital, Mueller said. Private equity companies had over $1.5 trillion in ready funds at very attractive interest rates even as the economy itself across the board was strong.

“You saw a rise in the U.S. [economy], and unemployment decreased in 2021, making for really a ripe market for mergers and acquisitions,” he said.

Another big M&A driver, particularly in IT services, was the shortfall in skilled labor, leading to a lot of acquisitions when they could immediately bring in skilled labor to help integrate new projects and grow the business, Mueller said.

However, he said, the main factor impacting IT M&A is digital transformation as companies are looking for help in those efforts.

“And to help them are the IT services businesses, managed security businesses, as well as managed security MSPs, which are our cybersecurity companies,” he said. “So all in all, digital transformation is really driving more growth in the IT space. And to do that, you’re also seeing quite a bit of acquisitions.”

About 48 percent of mergers and acquisitions in 2021 were driven by private equity, which was up from 25 percent only three years earlier, Mueller said.

“So you see private equity getting much more aggressive, particularly in the IT space, where they’re either building off of a platform or they’re buying a company that can become a platform under which you then roll in new acquisitions,” he said.