TMT blog: The US invasion


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Over the last few years the UK IT managed services M&A market has been notably short of overseas strategic buyers.  Over the same period we have seen plenty of domestic consolidators executing serial acquisitions, such as Six Degrees (now owned by US PE group Charlesbank), and UK PE have also invested heavily in the market with assets including Pulsant (Bridgepoint Development Capital now Oak Hill) and Connect Communications (LDC).  However, strategic exits for many of those investments have felt relatively hard to come by with overseas buyers being particularly short in supply.

This year however, we have really started to see that tide turning with US buyers in particular making their mark in UK managed services.  So far in 2016 we have seen the exit of Lyceum-owned business Adapt to Datapipe, the sale of Darwin-owned managed services player Attenda to Ensono Corporation, and this week PC Network Inc (PCN) expanded its UK market presence with the acquisition of key assets of UK IT services business Calleva Networks.

Interestingly, if you look at US buyer activity across the UK TMT market as a whole for the year to September, volumes are currently up around 32% on the same period for 2015 and this is something we are finding is being borne out in many of our current TMT processes.  Whilst UK PE appetite remains exceptionally strong, US strategic appetite has notably increased – in July for example we advised construction software business Union Square on its sale to US buyer Deltek.  So whether it’s thanks to a bit of help from currency swing or just a general strategic move towards increased external investment it’s hard to say, but for now at least it looks like US buyers are here to stay.