2006 Another Good Year for the IT Services M&A Market, Reports The McFaddin/Metis Group.BETHESDA, Md. -- The McFaddin/Metis Group announced today that for calendar year 2006 it noted 236 transactions in the information technology (IT) services sector. This represents a 7% increase over 2005. In the fourth quarter of 2006, there were 68 transactions, an increase of 17% over the fourth quarter of 2005 and a 24% increase over the third quarter of 2006. The data compiled for this study covers M&A activity involving U.S.-based sellers and acquirers who provide IT staffing, solutions and outsourcing services. The government sector continued to hold the lead in deal flow for the quarter with a total of 21 transactions and a percentage to total of approximately 31%. Most notable was the acquisition of Essex Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :KEYW) by Northrop Grumman (NYSE NYSE See: New York Stock Exchange :NOC (Network Operations Center) A central or regional location for monitoring a large network. Also called a "network management center" (NMC), "service management center" (SMC) or "network control center" (NCC), a NOC may be used to manage a large enterprise network, ). For calendar 2006, this sector generated approximately 32% of the total deal flow. The quarter also included a number of transactions in the Managed Services Provider space with 10 transactions, or approximately 14.7% of the quarter's total deal flow. Most noteworthy during the quarter was the acquisition of Counterpane by British Telecom (NYSE:BT). In all of 2004, this sector produced close to 8.5% of the total deal flow with many of the transactions being focused in the security side of the sector. Strong quarterly activity was also recorded in the SAP space with four transactions, or 5.9% of the quarter's aggregate deal flow. Most active was UK-based Axon Solutions, but transactions were also announced by EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. (NYSE:EDS) and Affiliated Computer Services Affiliated Computer Services (ACS) (NYSE: ACS) is a Fortune 500 company that provides information technology outsourcing as well as business process outsourcing solutions to businesses, government agencies, and non-profit organizations. (NYSE:ACS (Asynchronous Communications Server) See network access server. ). During all of 2006, this arena posted 3% of the total deal activity. Melanie McFaddin, President of The McFaddin/Metis Group and an active participant in the IT services M&A market for twelve years, commented, "The need for continued consolidation across the IT services sector is creating momentum. I would expect 2007 to bring a sizable increase in activity particularly in the commercial side of the sector given the improved business climate and the need for scale." The McFaddin/Metis Group is a mergers and acquisitions advisory firm focused on companies whose value is derived from professional-level human capital. Clients include companies who provide IT staffing, solutions and BPO BPO Business Process Outsourcing BPO Benevolent & Protective Order (of Elks of the USA) BPO Benzoyl Peroxide BPO Business Process Optimization BPO Broker Price Opinions BPO Buffalo Philharmonic Orchestra , professional staffing, and human resources consulting and BPO. |
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