Accenture, Dentsu and Deloitte top buyers in IT services market
In the last 30 months, more than 2,000 deals have been completed in the global IT services market. Accenture, Dentsu and Deloitte are the most prolific buyers to stand out from the crowd.
According to data sourced from Hampleton Partners, in the second half of 2019, transaction volume in the IT services M&A market increased dramatically. The number of deals bumped up to 407 from 380 in the first half of the year, with tech services and support making up the largest portion of those purchases, at 43%.
Around 60% of the total number of transactions in the business and IT services market involved a North American target company, while 29% involved a target headquartered in Europe. From a functional perspective, 42% of deals were closed in the technology services domain, followed by IT outsoucing services (33%) and IT integration services (24%). While there are clearly a great many firms investing in IT services at present, three stand out from the crowd.
Head and shoulders above the rest, Accenture was the top acquirer of companies in the last 30 months, with 53 purchases in total. Having committed to sustained acquisition drives in recent years, the firm kept up the pace in 2019, making a total of 24 deals. This represents a 50% increase from 2018, according to data from Hampleton Partners' IT and business services M&A market report.
Accenture’s continuing acquisition campaign has primarily been driven by a desire to build its digital capabilities. This is illustrated by its moves for Clarity Solution Group that provides data analytics consulting services; French consulting firm Silveo that offers services and solutions for digital manufacturing and intelligent supply chains; and many more.
The defining element of Accenture’s most recent purchases has been big data, with the most notable deal being the September 2019 purchase of Spanish big data and AI firm Pragsis Bidoop. It also played a role in the firm’s decision to pick up Australian data consultancy Analytics8 in August, and French data-driven marketing firm Sutter Mills in October. See the page Accenture | M&A on Consultancy.org for an overview of all the firm’s recent deals.
The second most regular buyer was Dentsu Aegis Network. The active acquirer completed 25 deals over the last 30 months, some centered mostly around digital marketing. In the last year, this included six such deals. These included the acquisition of Los Angeles direct-to-consumer marketing agency Mutesix, and several Asia-based firms which it hoped to rapidly scale. As a result, the firm moved for Chinese ecommerce agency EBP and leading Vietnamese creative agency Redder – giving it valuable inroads into new markets.
In third place with 16 acquisitions was Deloitte. The firm’s purchases included several data-focused firms, such as Australia-headquartered IT services firms Presence of IT – adding some 600 professionals to Deloitte’s Human Capital practice – and NeoData Australia, which joined Deloitte’s to its Technology Consulting vertical. See the page Deloitte | M&A on Consultancy.org for an overview of all deals.
Private equity
While consulting firms still dominate purchases in the IT services space, there has also been a notable boost in the deals being closed by private equity companies. Private equity buyers accounted for 15% of all transactions in 2019, having been just 5% in 2014. On top of this, private equity buyers sunk a total of $14.67 billion into the space in 2019 – a rapid rise from the $11.85 billion spent in 2018.
This is because IT services still represent an excellent investment opportunity. With private equity firms now armed with record amounts of capital and low interest rates and favourable debt markets, it is easier than ever for them to pick-up market-leading businesses at a time when demand for IT services is growing exponentially.
