Gambit publishes its latest IT market review
Key global stock market indices remained largely flat for the quarter, consolidating gains from 2013. This consolidation was underpinned by improving macro economic conditions, with the IMF stating its expectation that the UK will be the fastest growing G7 economy in 2014. Global Technology M&A was 23% higher than the previous quarter, underpinned by certain mega deals including Facebook’s $19bn acquisition of WhatsApp.
Transaction multiples remained robust during Q1 with UK Software and Services transactions having mean EV / EBITDA multiples for Q1 2014 of 12.1 and 10.7 respectively. UK private equity activity reduced sharply in the quarter, following significant activity during 2013. This is expected to be a temporary aberration, with many UK private equity investors firmly focused on the IT sector. GTCR acquired Callcredit from Vitruvian Partners for $586m, whereas Mobeus’ support of the £14m MBO of Entanet and Maven’s £4.6m investment in ISN Solutions were the only lower mid-market private equity transactions of note. Acquisitive UK corporates such as Capita, ACS and Alternative Networks continued their consolidation strategies.
Our view is that the favourable underlying market conditions and corporate confidence, supported by improved access to capital, will act as a catalyst for strategically significant M&A activity across the sector. UK businesses contemplating an exit should consider the current market as providing a significant opportunity.
Well-positioned and scalable companies will achieve good valuations as a result of increased risk appetite and ongoing flight-to-quality. This is supported by a significant number of public and private companies with access to capital and ambitious growth plans against which to deliver.
The full report can be viewed here.