Gambit’s Software and IT Services (SITS) Q3 Market Review evidences resilient SITS M&A activity in the face of increasingly challenging macroeconomic headwinds, geopolitical volatility and faltering technology stock market performance.
Whilst certain public and private SITS sub-sectors will continue to face downside valuation risks, dealmakers will favour assets with defendable operating margins, sustainable free cash flow levels and most importantly evidence of withstanding and successfully navigating volatile market conditions.
The Application Software sub-sector remained particularly active in Q322, accounting for 33% of total SITS deal volumes, buoyed by agile and scalable business models in the sub-sector, in turn, driving robust margins and enhanced value.
Strategically astute consolidators are capitalising on the short-term reduction in market SITS EV/EBITDA multiples, by acquiring robust, SITS assets at attractive valuations to facilitate portfolio optimisation and diversification to mitigate the current macroeconomic climate and fuel in-organic growth.
Corporate budgets continue to prioritise IT and digital transformation spending with cloud computing, cyber security, AI/ML and data analytics remaining at the summit of agendas.
M&A investment appraisal and financial due diligence exercises continue to evolve and experienced M&A advisors are continuing to facilitate optimal value realisation through effective negotiation of key issues to maximise shareholder proceeds.
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