IT Services M&A Update - Q4 2012

Generation Equity Advisors has published its latest IT Services M&A Update for Q4 2012.

IT Services M&A Transaction Highlights

Buyers in the IT Services sector were very active in Q4 2012.

Highlights of IT Services M&A transactions in Q4 2012 include:

ü  CSC sells three of its divisions including its Italy unit, Credit Services unit and its Australian IT Staffing unit.

ü  Deloitte acquires two companies: The Monitor Group and Recumbinant Data Corp.

ü  Cognizant acquires six C1 Group subsidiaries in Germany and Switzerland.

ü  Hitachi Consulting acquires Celerant Consulting (Jan 2, 2013).

ü  AON Hewitt acquires Workday specialist IT services firm OmniPoint.

ü  PriceWaterhouseCoopers acquires Govt. IT services firm Ray Group International.

We believe companies in the IT Services sector will continue to consolidate in 2013 as the economy improves globally and uncertainty is settled.  China and Brazil are likely active buyers of U.S. based companies looking to expand. Although, we noted a number of U.S. based IT Services firms active in 2012. We expect this trend to continue in 2013.

Q4 2012 – M&A Update

Q4 2012 was not as disappointing as Q2 and Q3. Comparing October and November 2011 to the same period in 2012, announced deal value increased by 29% to US$394 Billion. Deal announcements, which fell by 15% to 1,801 in the period, have been slower to recover. Nonetheless, there were a few pockets of noteworthy activity – the U.S. Presidential Election followed by uncertainty in the U.S. “fiscal cliff” negotiations in Congress did not help M&A activity overall.

Technology companies, striving to keep their competitive edge alongside industry giants like Apple and Google, continue to use M&A to expand in-house innovation and operational capacity with an increased focus on more transformative acquisitions.

Cisco Systems announced three acquisitions in November 2012 alone and five total acquisitions for Q4 2012. These deals, carrying sizeable price-tags, aim to broaden Cisco’s networking equipment capabilities. The company’s largest acquisition helped Cisco move to acquire cloud computing company Meraki for US$1.2 Billion. The deal will help to expand Cisco’s Wi-Fi deployment models and reduce service costs to mid-market clients.

For the complete report, go to:  www.generationequityadvisors.com

 

Generation Equity Advisors, LLC

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Los Angeles, CA 90024