USA sees IT M&A cool down in Q3

The study was announced by Melanie McFaddin, Managing Director at Claris Capital. She noted that in the third quarter of 2005, Claris Capital tracked 42 transactions in the broader information technology services sector. This activity was approximately 34 per cent less than the third quarter of 2004 and about 22 per cent less than the second quarter of 2005.

The data compiled for this study covers merger and acquisition activity and trends involving US-based sellers and acquirers who provide IT staffing, solutions and outsourcing services.

The most active sector was the government sector with a total of 10 transactions and a percentage to total deal flow of about 24 per cent. Of note during the quarter was the acquisition of Apogen Technologies, a recent equity-funded deal supporting a successful and experienced management team, by QinetiQ, another of the British-based acquirers.

There was also significant activity in the Microsoft solutions space with 5 transactions and almost 12 per cent of the quarter's total deal flow - an example cited here by Claris Capital being the acquisition of Lighthouse Group by CBH Consultants.

McFaddin added, "This quarter saw quite a few deals consummated by smaller buyers when the government sector is factored out. This activity among smaller companies, particularly in the IT solutions space, is driven by the need for increased scale as these smaller services providers try to compete for larger projects."

Claris Capital LLC is a private investment bank based in the Washington, D.C. area, providing mergers and acquisitions, financial restructuring and capital formation advisory services to middle-market companies. The firm's professionals have executed 300 transactions worth $55 billion in enterprise value.

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