The Mutual Benefit of IT Services Rollups

Given the number of current players as well as new entrants in the IT services market, private equity investors are encouraging ‘buy and build’ strategies to inorganically grow their investments. According to EY, over half of all private equity deals within the IT services industry were buy and build acquisitions in 2022. This can be attributed to a number of factors.

As the market expands and evolves, current IT services providers can utilise buy and build strategies to increase their product offerings. By acquiring a range of smaller IT services companies, they can also expand their customer reach and begin to upsell new services. Furthermore, by expanding their offerings, IT services firms can better navigate changing demands as well as potential regulatory changes that may cause friction to growth.

The complexity of IT services may be difficult for customers to manage, and having multiple providers can be costly and time consuming. Buy and build strategies can reduce these difficulties by bolting on multiple services into a single tailored solution for customers. One provider may prove cheaper due to economies of scale realised by the service provider and offers ease of use by centralising all enquiries and support activities.

IT services rollups can benefit both investors and customers. Investor success from today’s buy and build trend will become clearer in the years to come as investments mature. Alternatively, customers can reap the immediate benefits of new end-to-end IT services providers.