Gambit’s Software and IT Services (SITS) Q124 Market Review illustrates the renewed buoyancy of the SITS M&A market.
In a higher cost of capital economy, we have seen a shift in acquiror preferences for a focus on profitability over loss-making growth. As a result, profitable SITS businesses have seen valuations increase over the past 18 months whilst fast-growing unprofitable businesses have seen values decline.
SITS multiples rose to 17.5x in Q124, an increase of 5% in comparison to Q423.
Looking ahead, we forecast continued buoyancy in the M&A environment in H224 as the cost of capital softens in response to sustained low inflation and business owners take advantage of the favourable tax environment, before a General Election, which is expected to be announced in Q324.
SITS business owners should leverage the current ‘window of opportunity’ whilst the tax environment remains favourable, as Capital Gains Tax rules are speculated to increase following the anticipated General Election in Q424.
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