The UK’s Managed IT Service Providers (MSP) sector is consolidating rapidly, with over 60 deals reported in 2020. A detailed report from M&A advisor BCMS analyses transaction volumes in 2020 for MSPs in the UK, and offers insights into the factors driving this activity.
Whilst the global COVID-19 pandemic did impact deal volumes to some extent (especially in Q2 of 2020), the rate of dealmaking recovered strongly in H2, and continues to accelerate in the early part of 2021.
Private Equity has had a significant impact on deal-making activity, and the MSP sector will see more ‘buy & build’ activity in 2021 and beyond
Aside from quarterly fluctuations, the most obvious theme in 2020 was the prominent role played by Private Equity (PE) in sector consolidation – either making a first foray into the MSP sector with a platform investment, or backing existing platform MSPs to make bolt-on acquisitions. A number of PE firms now have more than one MSP investment in their portfolio, suggesting that the industry will see plenty more ‘buy & build’ activity in 2021 and beyond.
The report reveals that international buyers of UK MSPs largely remained on the sidelines last year – hardly surprising given the unprecedented events of the year, which played out against a backdrop of continuing Brexit uncertainty right through to December.
The report also covers:
- Which MSPs were acquired in 2020
- How M&A activity has been particularly strong among MSPs serving an SME customer base
- How acquirers are now seeking out targets whose service offering goes well beyond traditional MSP competencies to areas such as data and cloud
- Early indicators for 2021’s dealmaking environment
The report is free to download and is important reading for business owners in the MSP space who want to remain up to date on M&A trends in their sector.
Click here to download: Managed IT Services – 2020’s UK M&A Activity In Review