Technology Services Industry Update Q1 2023

Read more about M&A activity and trends in this sector

Technology Services Q1 Industry Update:

Private Equity investment driving significant continued consolidation of the Technology Services landscape

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Introduction: Technology Services Sector Themes

Private Equity players remain active in the middle-market despite economic headwinds in the broader economy. Industry consolidation remains a key theme, with platform and add-on acquisitions fueling inorganic expansion.

Technology Services Summary

  • Strategic and financial buyers remain active in the Technology Services space, investing in key industry themes including Digital Transformation, Cloud Enablement, Data & Analytics, Cybersecurity, and Managed Services
  • The market continues to reward high-quality companies with attractive exit opportunities and premium valuations

Key Industry Drivers: Private Equity Roll-ups

  • Private Equity (‘PE’) investment in the Technology Services sector remains robust, with over 100 deals announced per quarter, on average
  • Hundreds of PE sponsors have emerged having Technology Services as a core investment thesis

Technology Services M&A Themes (Q1’23)

  • Economic headwinds and fears of a recession have not slowed consolidation in the Technology Services sector
  • M&A activity in Technology Services rebounded in Q1 from Q4 levels, increasing 14.1%, to 396 deals in the quarter

Public Market Valuation Trends & Drivers

  • Valuation multiples (EV / LTM EBITDA) of publicly-traded Technology Services companies have compressed over the past year
    • Median multiples have declined from 18.2x at the end of Q1’22 to 14.5x at the end of Q1’23
    • Multiples have held more or less steady over the past quarter (e.g., relative to Q4’22)
  • Publicly-traded Technology Services share prices have appreciated modestly thus far in 2023 (+1.9%)

A Number of Private Equity Players are Driving M&A in Technology Services

  • KPMG has compiled a list of selected Private Equity firms in the Technology Services ecosystem, outlined on page 27+

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below. 

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Technology services Q1 2023 industry update

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Joseph Radecki
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