Gambit’s Software and IT Services Market Review for Q321 assesses the growth drivers of M&A activity and capital investment within the sector, considering the underlying market trends across industry subsectors and the factors contributing to heightened investor confidence and transaction volumes recorded in the quarter.
Sector deal volumes reached a record high in Q321, increasing by 46% on the previous quarter as they continue their upward trajectory. Transaction volumes have been elevated by financial and strategic acquirers entering subsectors with demonstrable covid resilience, scalability potential and strong operating margins, coupled with continued low cost of capital for SITS acquirers.
The Autumn 2021 Budget announced no changes to capital gains tax rates, enabling exiting shareholders to benefit from favourable tax rates and Business Asset Disposal Relief under the current regime. This is likely to change in the medium term and the UK Government is likely to significantly increase CGT rates which means a shorter-term evaluation of exit options is likely for many entrepreneurs.
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