M&A Activity in Digital Services H1/18 is Very Active

Some interesting observations from boutique M/A advisor Pharus Advisors on the state of play for transactions in the digital services sector:

From their report:

Acquirer appetites for digitally-focused services firms are becoming increasingly voracious

• There have been 147 digital and innovation services transactions in H1 2018, up 58% from H1 2017
• Dentsu and Accenture remain very active in 2018
• Consultancies such as EY, Deloitte, KPMG, and smaller agencies such as M&C Saatchi have been active acquirers
• PE acquirers have doubled their digital services platform acquisitions from a year ago - a trend we predicted in our 2017 report

Buyers seek subject matter and technical expertise, as well as impressive client lists and local market leadership

• Sought-after specialties include digital design, as well as cloud consulting and cloud migration services capabilities
• Subject matter expertise within financial services, healthcare, cyber and retail has also been in high demand
• Leadership in a particular geography (e.g. ANZ, Benelux) has been particularly attractive to large global buyers
• Data-focused and tech-enabled services firms remain in high demand

A diminishing supply of targets with highly-valued capabilities are pushing multiples higher

• When coupled with buyer competition, higher multiples and better terms for sellers of the most unique firms are more attainable

Unique differentiators include top-tier management and industry leadership, as well as scalable business and service delivery models

 Pharus.com