Software & IT Services M&A Pulse | First Half Year 2023 Review

While the impacts of an unstable global economy, inflation, the war in Ukraine, other military conflicts, geopolitical tensions and the climate crisis are felt, the S&ITS market continues to perform well with healthy returns. The S&ITS market experienced robust growth in H1 2023, as companies continue to concentrate on achieving scale or integrate vertically amid fierce competition. Proactively focusing on fast-paced digitisation, increased adoption of AI, changing consumer preferences and supply chain optimisation is crucial.

For PE, the first half of 2023 has played out in similar fashion to the back half of 2022 on many fronts. The industry continues to battle through a stubbornly high interest-rate environment that makes the cost of borrowing and servicing floating-rate debt prohibitively expensive. Add-ons continue to represent the greatest share of deals so far in 2023, but amid the rise of add-ons, megadeals have declined. Broadly, buyout strategies are used to finance larger deal sizes, while add-ons are synonymous with smaller deals.