The Technology Services Perspective – Q3 2021

Deal activity this quarter continues to be driven by strong confidence in acquiring capability in next-gen, modernisation and cloud-first tech stacks, and premium services. Equally, capturing the end-to-end digital transformation value chain continues to be a key M&A theme to become the strategic operator and engineering partner of choice for large-scale budgets.

Public tech companies continue to track the NASDAQ’s trajectory over the past 12 months. Overall, indices are tracking c.20%-45% ahead of the share price in September 2020 and median EV/EBITDA multiples have remained strong in Q3, largely trading in excess of 10x.

Q3 finished strong with 209 M&A transactions, up 27% from Q2, with the application and infrastructure segments representing the bulk of M&A activity. Notably, this quarter saw remarkably more capability-focused tuck-in deals than significant multi-billion dollar transactions we have seen in other quarters.