Pipeline preview: Is it time to prepare for a surge in IT M&A?

The number of IT and management consulting firms involved in mergers and acquisitions declined marginally in Australia and New Zealand in the first quarter of this year, according to investment bank Equiteq’s ANZ IT Services & Management Consulting Report for Q1 2023.

But despite some softness in the market, some are optimistic that M&A activity will pick up again in the second half of the year.

They include Melanie Unwin, who is a Microsoft partner mentor and co-founder of B2B marketing company Mogrify, which saw customers acquired in 2022, bought by the likes of Brennan IT and Deloitte.

“I think pretty much every customer we have has had a call this year to inquire about acquisition, but nothing's happened yet,” Unwin said. “So I think we'll suddenly see a big surge and it will be quite competitive between partners, which isn't something that we normally see. But I think that's I predict that for later in the year.”

“The competition's going to be tough because there are a lot more businesses that are still waiting to be snapped up than there was a year ago.”

“The movement and M&A that we saw in the channel last year was just unprecedented. We've not seen that this year, but it could be coming as things pick up in the second half of next year,” she said.

Among those on the hunt is ASX-listed cloud provider Nexion, which in May announced a loan agreement for up to $21 million to fund the purchase of complimentary technology businesses in Australia and New Zealand. earlier in the year.

Meanwhile in March, Tesserent stated it would continue to review potential acquisitions which may present themselves in the market after completing its purchase of training business ALC Group.

Orro Group has also been in expansion mode after announcing a $150 million funding package from Macquarie Capital in March. Since then, Orro has announced the acquisition of voice and collaboration partner Coloured Lines.

Atturra has announced two acquisitions since raising $25 million in December.

Focus areas for M&A in early 2023 were cybersecurity, Salesforce and managed services, reported Equiteq.

American companies also remain interested in buying Australian technology businesses, Unwin noted.

“A lot of our customers are telling us, and also as a Microsoft partner mentor what I'm seeing, is the US is really looking to Australian tech companies for purchase, just because of the exchange rates,” she said.

While Australian business owners hoping to attract buyers, obsess over revenue growth and balance sheets, Unwin will be running an eye over their marketing

“Out of the partners that we saw get acquired over the last couple of years, their brand and their value proposition is one of the key things that the investor or the buyer looked at in order to assess whether or not they would be a good fit.”

“They're not just buying your customers and your database, they're buying your people. So if you can show that you've got great people and a great culture, again, it really adds value when they're looking at you as an option to purchase or invest in.”

Melanie Unwin will appear on stage at the CRN Pipeline conference in August to share marketing advice for technology business owners looking for M&A. Join her and other keynote speakers, partners, vendors and distributors to tackle what partners should be preparing for next to grow their businesses. On the agenda will be security, cloud, AI, M&A, hiring, revenue growth opportunities, customer cost realities, marketing, the future of technology distribution partnerships and more. See the CRN Pipeline agenda and register your interest in attending.