What Makes an IT Services Company Attractive for Acquisition?
How IT Services Companies Can Best Position Themselves to be Acquired
The market for IT services companies is hot. Across the board, companies offering IT services – ranging from systems integration, data warehousing and cybersecurity to ERP implementation, IT consulting and other IT services – are in high demand by both strategic and financial buyers.
Many of these buyers are looking to execute roll-up strategies, the process of acquiring and merging smaller companies in an industry into a larger firm. This roll-up strategy can provide many benefits, including:
- Lower operating costs
- Increased buying power
- Larger geographic footprint
- Expanded portfolio of product and service offerings
- Better operational efficiencies
- Faster expansion (buy vs. build)
- Increased revenue
“The M&A market for IT services companies continues to be very active with many buyers executing on roll-up strategies,” according to Bridgepoint Director and IT Services sector lead, Chad Gardiner.
In this diverse and highly-fragmented space, the opportunity for growth via acquisition is more attractive than ever. And during this uniquely favorable M&A climate, IT services companies are finding it’s a great time to be a seller.
If you’re exploring the sale of your IT services company to take advantage of this seller’s market and the explosive appetite for roll-ups, it’s important to position your company to achieve the best possible result. Here are 5 factors that can position your company for a successful sale:
- Consistent, sustainable growth in revenues
- A reocurring revenue model with high retention
- Significant service differentiation
- Strong gross margins
- If project-based revenue model, a large salesforce and strong ability to convert initial projects into ancillary services
Every IT services company is different, so the list above is not comprehensive. When you’re ready to sell, it’s important to enlist the help of trusted M&A experts who have direct experience in your industry. Bridgepoint has experience helping IT services companies acquire other firms, sell to strategic acquirers and even raise capital for additional growth.
In fact, Bridgepoint recently conducted three value-maximizing transactions for IT services leader Data Migration Resources (DMR), representing them with both buy-side and sell-side advisory. Learn how we created value for DMR here.
Curious about the M&A market for IT services companies like yours? Find valuable insights in our complimentary IT Services M&A Update, published quarterly. You’ll find the latest information regarding M&A transaction volume, recent and notable transactions, buyer statistics, EBITDA multiples and more – download it here.