The outlook is positive for acquisition-hungry firms, with strong growth and healthy returns from IT company buyouts, according to recent research.
Financial thinktank, Plimsoll Publishing, found IT businesses posting strong sales growth with firms well advised to acquire other players.
The IT industry has seen a glut of acquisitions with companies such as Matrix Communications, Logicalis, Azzurri, and Affiniti all making a number of purchases.
David Pattison, senior analyst at Plimsoll, said: “All of the IT segments are doing well and there is a positive spin on the growth that firms are achieving. The cost to enter the market is lower than ever before, while the returns are still good for investors.
“The industry is still competitive. The players looking to acquire are gaining the market share and building their business aggressively.”
Duncan Davies, mergers and acquisitions manager at reseller group TSG, which has completed 18 acquisitions to date, said: “Generally mergers and acquisitions are on everyone’s radar. Smaller resellers see the writing on the wall and accept consolidation. Acquisitions enable you to get where you need quickly, but they are more risky than organic growth.”
Ian Cook, chief executive at reseller Logicalis, which has made a series of acquisitions, said: “I think the price of acquiring businesses is going up, they were lower 12 months ago, but frims are seeing consolidation and are demanding a higher price.”
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