| | 9CIOReviewAPRIL 2021Outsourced services most in demandThe good news for those working in companies in IT Outsourced Services, though, is that this segment,which constitute 33 per cent of deals,continued to attract the highest valuations - 9.7x trailing 30-month median EBITDA and 1.3x EV/S multiple in 1H2020- and saw a total of 120 transactions, fractionally down from 129 deals in 2H2019. The segment also saw a significant number of large deals, particularly involving payment processing firms and outsourced software development. Fiserv raises the game in payment processingIn March 2020, Fiserv acquired MerchantPro, a provider of transaction processing services and point of sale (POS) systems. Headquartered in New York state, MerchantPro Express is an Independent Sales Organization (ISO) that provides state-of-the-art processing services, advanced POS equipment and merchant cash advances to businesses across the US. MerchantPro leverages technology, analytics and consulting to grow its clients' business by providing a wide variety of value-added services to drive down processing costs. The deal sought to bring togethermarket-leading payment solutions from Fiserv, including CoPilot, CardPointe and Clover, with the proven and sophisticated onboarding and service of MerchantPro Express.Magic Software Enterprises invests in outsourced software developmentAnother interesting deal occurred in June when publicly traded company, Magic Software Enterprises, an Israeli low-code integration and application development SaaS provider, acquired Dutch companies Magic-Hands and Knowledge & Solutions Software B.V ­ two software development firms based on the MAGIC programming language.Magic Software Enterprises, a global provider of end-to-end low code integration and application development platforms solutions and IT consulting services, thus expanded its footprint in the Western Europe market. The collaboration between Magic Software, Magic-Hands and Knowledge & Solutions Software will increase development power acrossEurope as Magic-Hands' team develop, manage, and deliver software solutions. Different types of software include Magic4Business (the finance and billing solution) and Magic4Trade (for supply chain businesses and custom-made software solutions).Looking forwardSo, from a mergers and acquisitions perspective, the IT and Business Services sector is in a paradoxical position. While the pandemic initially caused lower deal volumes and valuations, some areas in IT are evidently poised to benefit from the shift to online. Also, from other changes in organisations' use of technology this year and beyond and from a rebound in stock market indices and investor appetite. After all, the industry deal drivers remain the same: digital transformation and continued transition to the cloud drive demand for IT services and resources and there remains a massive amount of unspent investments funds waiting to be deployed by both strategic and financial buyers. So as a CIO - whether a founder, shareholder or employee with options working in IT and Business Services and, particularly,Outsourced Services, the outlook for successful exits looks good. Hampleton anticipates M&A activity in the sector to remain stable for the rest of this year and to accelerate in 2021 as market dynamics continue to drive larger service companies to acquire high quality and specialised capabilities.
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