‘A deal logjam has developed as fear of lower exit valuations has forced some private equity firms to postpone selling portfolio companies,’ says John Holland, managing director of Corporate Finance Associates. ‘Despite the challenges facing the private equity industry, there have been many acquisitions of large IT services businesses by private equity firms so far this year.’

Despite a deal logjam and private equity firms holding on to companies longer for higher valuations, the outlook for M&A activity in the North American IT services industry is still “very promising.”

“A deal logjam has developed as fear of lower exit valuations has forced some private equity firms to postpone selling portfolio companies,” said John Holland, managing director of Corporate Finance Associates. “Despite the challenges facing the private equity industry, there have been many acquisitions of large IT services businesses by private equity firms so far this year.”

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.

And while M&A deals in the IT services industry are down in the first half of 2024 compared to the same time period in 2023, about eight percent, they still exceed pre-pandemic levels. “Therefore, from a historic perspective, the current volume of M&A activity in the North American IT services market is robust,” said Holland.

Due to increased interest rates, many PE companies have held onto companies longer than the typical three-to-five-year period, but Holland expects that prolonged period to end sooner rather than later.

“The Bank of Canada recently reduced interest rates and the US Federal Reserve is likely to commence rate reductions soon,” he said.

However, that didn’t deter Q2 from seeing mega deals in terms of IT M&A activity.

In May, Ntiva acquired The Purple Guys in a landmark deal that Holland called “a colossal move” in the MSP industry.

“I think it’s a very positive indicator that capital conditions are very robust and healthy, even in a higher interest rate environment,’ he said at the time. “There’s definitely pressure on private equity firms to sell the businesses that they’ve been holding for a little bit too long. This [sale] is a good sign that capital conditions are in a good position for M&A right now and as interest rates descend over the next year or two, that will accelerate M&A activity.”

Here are the eight biggest M&A deals in the IT services industry in Q2 2024. Terms of the deals were not disclosed.

8. nClouds Acquired Foghorn Consulting

In April, nClouds, an Amazon Web Services premier tier services partner, acquired fellow AWS premier tier partner Foghorn Consulting. Foghorn is known for its focus on cloud security, migration and application modernization services.

nClouds acquired San Francisco-based Foghorn Consulting from Centersquare, which purchased Foghorn in 2021. The nClouds/Foghorn acquisition made for a significant milestone for the combined organization as it will serve hundreds of customers across a host of industries including healthcare, life sciences, software, financial services, manufacturing, energy and the public sector.

7. Insight Enterprises Acquired Infocenter

In May, Chandler, Arizona-based Insight Enterprises acquired Infocenter, a ServiceNow Elite Partner with 700 employees. The acquisition adds ServiceNow consulting, implementation and managed services to Insight’s automation solutions portfolio.

Infocenter’s ServiceNow capability will drive deeper business value and enablement to Insight’s client base, enhancing Insight’s established multi-cloud capabilities around Microsoft Azure, Google Cloud Platform, AWS and private cloud infrastructure. The acquisition is also an opportunity for Insight to help clients leverage generative AI provided by cloud hyperscalers.

6. Ntiva Acquired The Purple Guys

Ntiva acquired Shreveport, La.-based The Purple Guys in May, expanding their geographic footprint with a stronger presence in the Mid-Atlantic, Southeast and Midwest regions as well as the South. The combined companies have more than 800 employees and 2,000 clients across the U.S.

“[There are] cultural similarities between the two organizations,” Christopher Vollmond-Carstens, chief M&A officer for Ntiva, told CRN at the time. “People first, and that’s clients as well as our staff, is at the forefront of our mind and forefront of our mission as we seek to build, grow and develop our respective companies. The second is the unique situation in that we are not in any overlapping markets. We have very complementary geographic markets so there’s no overlap to be concerned about. It’s just a perfect fit between the two sides.”

4. SHI International Acquired Locuz Enterprise Solutions

In May, global IT solution provider SHI International acquired India-based Locuz Enterprise Solutions, a provider of managed cybersecurity and digital transformation services. The acquisition adds more than 800 employees and a fully-managed NOC (network operation center) and SOC (security operations center) to Somerset, N.J.-based SHI.

“It is a direct investment in our customers’ success,” Thai Lee, president and CEO of SHI, said in a statement at the time. “The addition of Locuz will be a key component of our mission to deliver comprehensive solutions that address the complex needs of our customers globally. Customers can expect to benefit materially from our combined advanced service capabilities.”

4. VTG Group Completed Two Acquisitions

Virginia-based VTG Group completed two acquisitions in Q2. The security solutions provider in April acquired Ohio-based Vana Solutions LLC. to provide enhanced end-to-end digital transformation expertise to deliver secure cloud environments, data fabric solutions and advanced analytics for national security programs.

In June, VTG acquired Northern Virginia-based Clear Cloud which delivers software, cloud and data engineering solutions and services to U.S. intelligence community customers. The acquisition accelerated VTG’s software-oriented intelligence community growth strategy.

3. The 20 MSP Completed Three Acquisitions

Plano, TX-based The 20 MSP announced three acquisitions: Kansas-based Tech Junkies, Mississippi-based Matrix Solutions and Level 10 Technology, which is based out of Kentucky and Tennessee.

The three acquisitions are part of The 20’s strategic M&A spree in started in 2022. Its consolidation strategy is to build on pre-existing synergies, including shared tools and processes to ensure standardization and seamless scalability.

2. Evergreen Services Group Completed Three Acquisitions

San Francisco-based Evergreen Services Group acquired three MSPs in Q2: UK-based Digital Origin, Annapolis, Maryland-based Omnyon, a leading IT services, data science and software engineering services provider in the national security sector, and Frisco, Texas-based DKBinnovative.

Digital Origin has a unique connectivity-as-a-service (CaaS) business model which delivers wholesale IT, MSP and cybersecurity solutions to customers. DKB has a long track record of retaining customers, operational maturity and a strong ability to meet the needs of underserved verticals.

1. Accenture Acquired 11 Companies

In Q2 Accenture acquired 11 companies globally including Italy-based Intellera Consulting, Tokyo-based Climb, Spain-based Axis Corporate, London-based Unlimited, Virginia-based Cognosante, Germany-based Parsionate, Brazil-based Soko, Tokyo-based OpenStream Holdings, Australia-based Partners in Performance, Netherlands-based Teamexpat and Italy-based Fibermind.

The companies will enhance Accenture in divisions of the business including Accenture Song, which helps clients with accelerated growth and value through a combination of product and experience design, technology, media and marketing strategies. Others will deepen services such as data consultancy, cloud modernization, public sector consulting and AI capabilities.