M&A may have broadly slowed temporarily at the start of lockdown last year, but demand is now back with a vengeance.
That’s according to Megabuyte Chief Analyst, Philip Carse, who spoke at UC Today’s M&A Insights 2021 earlier this week. You can register to view the content free of charge here.
Carse said that Megabuyte has tracked 29 UK channel acquisitions in the first half of this year, following 47 in 2021.
Investment is coming into the channel from right across the board, he added.
“Generally, the money is all across the investment community,” he said. “It’s the private equity, infrastructure funds, institutional investors that invest in the stock market, it’s even the debt funds.
“There is an awful lot of money looking for a home in a low-interest environment.”
Carse said that, according to Megabuyte analysis, around £950m has been spent in the channel across 2020 and the first half of this year – around 79 percent of which has come from private equity.
The pandemic has of course played an impact on the increased interest in the IT and comms channel, particularly around companies with digital and Microsoft-focused skills.
The dramatic shift to remote working last year, coupled with the realisation that many businesses will opt for a hybrid model, has also driven demand.
“Microsoft Teams has exploded, but it’s more than that,” Carse said.
“A lot of companies want to use Teams as their view into the world, not just a collaboration. They want voice to be enabled… and that has sped up the convergence of voice and IT.
“We’ve probably just seen the first example of an IT services company buying into telecoms which was Content+Cloud buying Sipcom. Traditionally it has been the other way.
“That’s one example, but more broadly the pandemic has accelerated digital transformation.”
Carse also said that multiples have increased in many cases, with software and digital transformation companies capable of exits at 30-times EBITDA.
You can view the session, and the whole M&A event, by registering for free here.
