M&A activity in the technology service sector in 2021 smashed nearly all previous records as service providers, technology vendors and private equity firms aggressively sought capabilities in cloud, engineering, analytics and cybersecurity.
A total of 307 technology services acquisitions in 2021 added up to a combined value of $51 billion. But when you look at the first quarter of 2022, you see the white-hot M&A activity started to cool. In 1Q22, there were just 56 transactions with a value of $2.6 billion. By both volume and value, this is the lowest result in five quarters (see Data Watch).
This does not mean M&A activity has come to a halt. Firms like Accenture, Deloitte, IBM, Persistent and Tech Mahindra have been especially active investing in areas like cloud, cybersecurity and sustainability.
Rising interest rates, record inflation and general uncertainty about the state of the global economy have slowed activity over the past three months, which is likely to continue for the remainder of 2022.