Software & IT Services M&A Pulse | Second Half Year 2023 Review
The overall trends in 2023 mirrored the challenges faced in Software & IT (S&IT) services dealmaking compared to 2022, with deal value decreasing by 44.9% year-on-year and deal count down by 24.1%. These trends reflect the normalisation following the strong fiscal and monetary stimulus seen in 2021 and H1 2022. In 2023, S&IT constituted 15.1% of the global M&A deal value, marking a significant decrease of 800 basis points compared to 2022 levels. However, it was only 64 basis points below the average seen from 2017 to 2019.
An analysis of deal momentum across various sectors shows that S&IT currently has the lowest score. In contrast, a similar analysis on multiple expansion reveals that S&IT holds the second highest score. This discrepancy is attributed to the current state of private markets, where firms are selling high-quality assets that achieve strong valuations and retaining assets when buyers do not meet the sellers’ price expectations.
Looking into 2024, we expect M&A dealmaking appetite to revert back to growth as the latest monetary tightening cycle comes to an end with markets expecting rates cuts in 2024.
