The number of M&A and private equity deals in the technology service sector in 2022 reached $57 billion.
The number of M&A and private equity deals in the technology service sector including IT Services, BPM, and ER&D, reached 947 — the highest number recorded in the past five years, according to a report by EY and Nasscom.
Private Equity (PE) deals placed several large bets — 15 out of 23 large (over $500 million) deals in 2022.
BPM and ER&D services experienced growth of 1.5x and 1.8x, respectively compared to 2020.
“While the first quarter saw a slowdown in deal activity, both strategic purchasers and private equity firms continue to hunt for enhancing their digital and domain capabilities, expanding geographic reach, and filling white spaces in their portfolios,” said Nitin Bhatt, Technology Sector Leader, EY India.
Areas such as Cloud, data and AI, cybersecurity and digital product engineering command a relative premium.
“The last 24 months have witnessed a significant shift in enterprise investments towards digital and business transformation. Technologies such as AR, VR, IoT, and edge intelligence, are now finding applications in manufacturing, automotive, and supply chain,” said Sangeeta Gupta, Senior Vice President and Chief Strategy Officer, Nasscom.
Though deal activity has softened, with over 150 deals announced in Q1 CY23 compared to more than 270 in Q1 CY22 and over 220 in Q1 CY21, deal activity for mid-sized companies is expected to remain strong across the broader M&A market, the report said.