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2024 saw significant changes and growth in the M&A space, particularly within the technology sector. Tech mergers and acquisitions continue to expand rapidly, driven by the constant appetite from buyers. As this sector grows, it will shape the M&A environment for the upcoming year, especially within the IT and digitized spaces.
What We Can Expect in M&A in 2025:
Consolidation
As large corporations continue to expand, we can expect smaller firms to be acquired by these rapidly growing larger firms looking to add new specialties, especially within IT and digital marketing. This trend is already evident in specialized areas such as managed service providers (MSPs), cybersecurity, cloud providers, and digital marketing. The drive for consolidation is fueled by the need to streamline operations, reduce costs, and integrate advanced technologies like AI and machine learning.
Cybersecurity
With cybersecurity remaining a top priority, companies of all sizes will be looking to acquire assets with cybersecurity expertise fueled by recent attacks. The increasing sophistication of cyber threats, including AI-powered attacks, has made cybersecurity a critical area for investment. Companies are seeking to bolster their defenses by acquiring firms with advanced security capabilities.
Channel Partners
Strong relationships matter in M&A now more than ever. Channel partnerships play a valuable role in expanding and retaining a client base, making these connections crucial for strong deals. Microsoft and VMware are going through some of the more notable changes on different ends of the “spectrum” creating more room for acquisitions. VMware announced early last year its partnership program will be ending under new ownership while Microsoft is pushing its partners to start mastering Co-Pilot/AI offerings.
Cloud-Native Services
The growth of technology has led to a rising demand for cloud-native services. Companies with cloud specialties will see a new focus in the M&A space. The shift towards cloud-native architectures is driven by the need for scalability, flexibility, and cost-efficiency. As businesses migrate to the cloud, acquiring firms with cloud expertise becomes a strategic priority.
Artificial Intelligence and Machine Learning
AI and ML are evolving and quickly taking over the technology space, especially in M&A. Companies with expertise in these areas can deliver innovative solutions, automation, valuable insights, and improved decisions, making them desirable acquisition targets. The integration of AI and ML into business processes is expected to drive significant M&A activity as firms seek to enhance their technological capabilities.
Managed services
Businesses are continuing to outsource IT services, creating a growing demand for assets with strong managed services capabilities. The trend towards managed services is driven by the need for specialized expertise, cost savings, and the ability to focus on core business activities. Companies offering comprehensive managed services are likely to be prime targets for acquisitions.
The M&A market in 2025 is being driven by a convergence of factors and is set to be a year of dynamic growth trends. Want to see how your business can take advantage of this promising year? Contact the IT ExchangeNet team at https://www.itexchangenet.com/contact-us.
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