PRINT THIS PAGE Lyndhurst Partners IT services M&A review - Q4 2006
28/02/2007. Source:Lyndhurst Partners.
Lyndhurst Partners identified a total of 99 ITPSO-related transactions during the fourth quarter of 2006. This total represents a 32.0 per cent increase over the prior quarter’s total (75), and a stunning 90.3 per cent increase over the same period a year ago (52). For the year, aggregate transaction volume swelled 50.0 per cent over 2005 (218) to a total of 327. This total represents a 21.1 per cent increase over both 2003 and 2004 (270 each).
An explanation for the dramatic increase in transactional activity in 2006 is found in Volume 3, Issue 3 (July, 2005) of The Lyndhurst Partners Review where, in explaining the second quarter’s (2005) decrease in activity, we commented, "Though only by anecdotal evidence, Lyndhurst Partners believes that the decline in transactional activity is due, at least in part, to a transition currently occurring in the M&A marketplace. The markets for most ITPSOs stabilized during the second half of 2003. At this time many organizations experienced consolidation "pressures." However, these same organizations were fearful that a corporate valuation based on its prior trailing twelve months revenue and EBITDA would not provide an acceptable valuation. Therefore, many potential sellers committed themselves to 12-15 months of consistent revenue growth and sustained profitability prior to an active pursuit of M&A opportunities (i.e. until mid year 2005)."
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Lyndhurst Partners (LPI) is a leading M&A advisor to Information Technology Professional Service Organizations in the middle market. With a North American focus and global experience, LPI provides consulting services related to buy and sell-side M&A engagements, the identification and development of strategic offshore relationships, and corporate valuations. Additionally, for the executive team experienced in transactional activity, LPI offers outsourced buy-side M&A services. These services augment existing internal resources and significantly increase qualified deal flow.
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