Welcome to the Q2 2017 edition of our Digital Services Perspective – Results International’s quarterly market update for the digital services segment. The digital services sectors we track in this market overview include (i) Data & Analytics, (ii) Strategy, UX, Design & Build, (iii) Bespoke Software & Systems Integration, (iv) eCommerce and (v) Mobile App Development. We cover cyber services within our Cyberscope market review and the broader advertising and marketing services market in our quarterly infographics which you can find here.
The second quarter of 2017 saw a total of 83 deals completed, indicating a slight decline from Q1 but a small increase from Q2-16. The public markets in IT/ Consulting Services and Marketing Communications reflected a similar slowdown this quarter tracking down 1.8% and 0.3% respectively. By subsector, almost half of deal activity this quarter was in Bespoke Software & Systems Integration (42), continuing the strong deal activity from last quarter, followed by Strategy & UX, Design & Build (16).
Large IT/consulting service providers have remained active in the sector with Accenture acquiring Media Hive (eCommerce) and Intrepid (mobile app development) and KPMG acquiring system integrations company Tomont Solutions. Large marketing services groups have also continued their expansion in digital services with acquisitions by Dentsu and Merkle of data analytics providers Outfox and Divisadero respectively, demonstrating a strategic imperative to grow in the space.
The largest disclosed transaction recorded this quarter was Volpi Capital’s $100 million management buy-out of systems integration and IT services company Version 1. The investment is the largest made to date by Volpi Capital and reflects private equity’s growing appetite in digital services. We expect this interest in the sector to continue into Q3 and beyond, overall making it a good time to contemplate fundraising, exit or growth through acquisitions in the digital services space – if you are please do get in touch.
We hope that you enjoy the document and look forward to discussing the data and underlying themes with you.
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We hope that you enjoy the document and look forward to discussing the data and underlying themes with you. We have also produced our view on the previous quarter’s proceedings in a series of other market reviews on: