M&A Expert: ‘Ongoing Healthy Appetite’ For IT Services Deals In 2025

‘The market will continue to be healthy, and while we don’t foresee a dramatic rise in the number of deals, we expect the volume to hold steady or even increase slightly in 2025. Economic factors such as interest rate adjustments and government policy will play a role, but the fundamentals of the IT services M&A market remain strong,’ says Corporate Finance Associate’s John Holland.

The M&A landscape in IT services has seen significant evolution over the past few years, and despite some volatility in 2024, one industry expert suggested the market is “poised for stability” throughout 2025.

In 2024, the IT services sector saw 497 transactions in North America, a slight dip from 557 in 2023, but still well above pre-pandemic levels, according to a report for Corporate Financial Associates. Laguna Hills, Calif.-based Corporate Finance Associates is an investment banking firm with decades of experience in executing mergers and acquisitions in the IT and telecom services industries.

Despite higher interest rates and a shifting economic landscape, John Holland said there is still an “ongoing healthy appetite” for acquisitions.

“I think that the M&A volume is steady and there were more deals in Q4 than in Q3, which is a good sign,” Holland, managing director of CFA, told CRN. “While the overall volume was lower than in 2022 and 2023 when interest rates were extremely low and the pandemic economy was in full swing, the market has remained quite healthy.”

In fact, the aggregate value of these M&A transactions saw a 60 percent surge in 2024, reaching unprecedented figures driven by large-scale acquisitions in Q4. One of the standout deals was World Wide Technology’s $1.25 billion acquisition of Canadian company Softchoice, a major cloud solutions provider. Other notable deals included CDW’s acquisition of Mission Cloud Services and Xerox’s purchase of IT Savvy.

“It’s not unusual for the big players to come out with significant acquisitions when they see value in expanding their portfolios, whether that’s for talent, geographic reach or new solutions,” he said. “World Wide Technology, for instance, made a strategic move into Canada, which indicates how these companies are looking to grow in new regions.”

Looking ahead, Holland said this pattern of strategic acquisitions will continue as companies like CDW, Presidio and Cognizant remain “very active” in filling gaps in their service offerings.

“The trend we’re seeing is larger players being very strategic, looking for acquisitions that complete their cloud offerings or enhance their cybersecurity capabilities,” he said.

The big question is whether AI-focused companies will begin to see more M&A activity in the coming years. While there has been some interest in companies that leverage machine learning and artificial intelligence for big data projects, Holland remains cautious.

“I haven’t seen a lot of M&A activity in AI just yet, but that could change as demand for AI-driven solutions continues to grow,” he said.

The private equity market also continues to drive a significant portion of M&A activity, with PE firms typically acquiring platform companies and then scaling them through bolt-on acquisitions.

“There are so many compelling reasons for private equity firms to continue acquiring,” he said. “The leveraged buyout model has been successful for decades and I don’t expect that to change, even if we see slight fluctuations in interest rates.”

However, while private equity’s involvement in M&A remains robust, there is a notable trend towards consolidation in more niche markets as well.

“There’s been significant consolidation within specific IT services sectors like Salesforce solutions and ServiceNow providers,” he said. “Smaller, fragmented markets are ripe for consolidation and we’re seeing a lot of activity there.”

Looking into the second half of 2025, he predicts “more of the same” in terms of M&A activity with steady volume and strategic acquisitions from large companies looking to expand in key areas, especially in cloud services and cybersecurity.

“The market will continue to be healthy, and while we don’t foresee a dramatic rise in the number of deals, we expect the volume to hold steady or even increase slightly in 2025,” he said. “Economic factors such as interest rate adjustments and government policy will play a role, but the fundamentals of the IT services M&A market remain strong.”