IT M&A Slows in 2017

​Mergers and acquisitions (M&A) activity within the information technology (IT) space showed signs of slowing in 2017, although deal multiples remained elevated. In North America, IT M&A ended the last quarter of 2017 with 14.8% fewer deals closed than the fourth quarter of 2016. Similarly, deal value in the fourth quarter fell 30.3%, from $79 billion in the fourth quarter of 2016 to $55 billion in the fourth quarter of 2017.

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According to RSM and Pitchbook, EBITDA multiples and median deal sizes reached record highs EBITDA multiples peaked at 12.0x EBITDA in 2017, while the median M&A and private equity (PE) deal sizes reached $50.5 million and $95.0 million, respectively. High multiples and increasing deal sizes may be cause for diminishing M&A activity. Buyers are spending more time on due diligence, leading to fewer deals completed. RSM notes that large cash reserves and cheap debt will continue to power the IT M&A cycle going forward; however, in their estimation, the heights of recent years are not likely to be achieved.

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