Mergers and acquisitions in the IT services sector: a strategic overview of 2024 and predictions for 2025
min readThe past year has seen a number of mergers and acquisitions within the mid-market ITSM space, with a marked shift towards enhancing technical prowess and expanding service capabilities. In particular, the trend in 2024 was characterized by a series of calculated moves to acquire specialized skills in data analytics, AI, and cybersecurity, as well as to scale operations in areas such as reseller services and IP procurement services.
Key acquisitions of 2024 on which we have advised:
The Tech M&A team at Charles Russell Speechlys had an extremely busy 2024. Disclosed market deals included:
- Acora’s acquisition of Elastacloud, a trailblazer in data science and AI;
- Nortal’s purchase of 3DOT Solutions, a UK cyber security consultancy and certified supplier to the UK Armed Forces and Intelligence Services;
- CLA UK’s acquisition of Engine B, a next-generation AI-driven, UK-based technology company that specializes in delivering generative AI solutions for the professional services industry; and
- Advania UK’s takeover of Servium, which expanded its reseller operations and IP procurement services.
2025: the road ahead
The coming year is expected to see a continuation of 2024’s trends, with a particular emphasis on penetrating specific customer sectors such as defence, healthcare, and financial services. These sectors have regulatory requirements and a strong emphasis on security, so demand tailored IT solutions, and companies with a strong presence in these areas are likely to be prime targets for acquisition. Expanding international operations is also expected to be a priority for some industry participants.
Data Privacy and Compliance
With the EU’s regulatory framework becoming increasingly stringent, firms that offer data privacy and compliance solutions are expected to be in high demand. The new data laws, discussed by our regulatory expert, Janine Regan, are likely to drive M&A activity as companies seek to ensure compliance and capitalize on the growing need for these services. Changes in the EU as a result of the European Strategy for Data will also provide opportunities for innovation as access to data and interoperability of services is improved.
Sustainability in IT
The push towards sustainability is also shaping M&A strategies. As customers increasingly value sustainable practices, companies that provide sustainable IT services are expected to become attractive prospects. The industry is grappling with the environmental impact of AI, particularly its significant power consumption, highlighting the need for investment in renewable power infrastructure to support sustainable AI development.
AI infrastructure as a service
The expansion of AI has led to the creation of large data sets and complex training models, which in turn is expected to provide an opportunity for consolidation and provision of “infra-like” service to enable customers to create and manage customised and proprietary data models and tools. As AI continues to advance, companies that offer the necessary subject matter experts and infrastructure to support these developments are likely to become targets for M&A.
In summary
M&A activity in the IT services segment is a strategic response to the industry’s rapid development and the need for advanced technological solutions. As we look to 2025, the focus on data privacy, sustainable IT practices, and AI infrastructure is expected to drive further consolidation. Companies that can successfully identify and integrate these specialized services will likely emerge as leaders in the evolving IT landscape.
