Activity in the First Quarter Bodes Well for IT Services M&A in 2005, Reports The McFaddin/Metis Group.HOUSTON -- The McFaddin/Metis Group announced today that in the first quarter of 2005 it noted 63 transactions in the broader information technology (IT) services sector. This activity was 3.3% greater than was noted in the first quarter of 2004 and 5% greater than the fourth quarter of 2004. The data compiled for this study covers merger and acquisition (M&A) activity and trends involving U.S.-based sellers and acquirers who provide IT staffing, solutions and outsourcing services. The government sector continued its consolidation and was once again the most active sector with a total of 22 transactions and a percentage to total deal flow of 35%. Of note during the quarter were the acquisitions of The Sytex Group by Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. (NYSE NYSE See: New York Stock Exchange :LMT LMT left mentotransverse (position of fetus). ) and the acquisition of NetSec, a managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality provider focused on the provision of security services to the government space, by MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. (Nasdaq:MCIP MCIP Meteorology-Chemistry Interface Processor MCIP Member, Canadian Institute of Planners MCIP Maryland College Investment Plan MCIP Mentoring Children of Incarcerated Parents MCIP military command inspection program (US DoD) ). There was also continued consolidation during the quarter in the Microsoft services provider space with seven transactions, or 11% of the quarter's aggregate deal flow. Most notable was the acquisition of en'tegrate, an Axapta solutions provider, by Avanade, a joint venture formed by Microsoft and Accenture. Also of note during the quarter were transactions involving ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. services providers, including Zannett's (Nasdaq:ZANE) acquisition of the Oracle consultancy Whitbread Technology Partners, and transactions within the Business Intelligence (BI) arena. Melanie McFaddin, President of The McFaddin/Metis Group and an active participant in the IT services M&A market for ten years, commented; "The first quarter got off to a strong start again this year. It is my opinion that activity will continue to escalate as sellers see more substantial opportunities to partner with well-capitalized buyers in servicing clients in this improving IT services environment." She further noted that "indications are that sellers are considering exploring the M&A market in the near future given the increased activity and a desire to realize a liquidity event during this next cycle." 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 management consulting, information technology staffing, solutions and consulting, professional staffing and human resources consulting. |
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