IT Services + Digital Transformation
Q2 2025 Update
Q2 2025 Key Trends + Insights
AI, ML, and Data + Analytics
Demand for AI and analytics service providers persists as client expectations have shifted from basic descriptive reporting to AI-powered, industry-specific predictive and prescriptive analytics embedded within consulting engagements. Leading technology and consulting firms are actively acquiring specialized AI-driven analytics companies to enhance their capabilities in delivering real-time insights that guide clients’ operational and strategic decisions. Additionally, consultancies offering analyticsenabled transformation services – particularly those with significant recurring revenue – are attracting substantial Private Equity interest due to their defensible growth and scalability.
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Salesforce Solutions Consultancies
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As organizations across sectors prioritize the modernization of customer engagement, sales, and service operations, Salesforce is at the core of these transformation initiatives To maximize the platform’s value, enterprises require expert partners who can customize, integrate, and maximize the value of their Salesforce investments, fueling the need for consultancies Global Systems Integrators and mid-sized consulting firms are competing to position themselves as one-stop shops for cloud CRM and ERP solutions, and acquiring Salesforce-focused firms is integral to this strategy. Additionally, Salesforce’s growing emphasis on industry-specific clouds (e g , Financial Services, Health, Manufacturing) and advanced AI tools (such as Einstein and generative AI) has spurred Strategics to seek out partners with deep vertical acumen and proven AI integration skills Acquired by
Managed Services Providers (MSPs)
M&A activity is accelerating as client expectations for MSPs grow more complex and consolidators seek to expand both the depth and breadth of their service offerings MSPs with substantial security capabilities – in areas like MDR and Zero Trust – and those leveraging AI-driven automation for monitoring, incident response, ticketing, and SLA optimization are especially sought after The rising need to support multi-cloud environments, as many clients operate across AWS, Azure, and Google Cloud, is also a catalyst for consolidation Private Equity has maintained elevated interest in the space, with MSPs that boast high levels of recurring revenue garnering the greatest attention.
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Q2 2025 HVA On the Road
The HVA IT Services + Digital Transformation Team recently attended two sector conferences, SAP Sapphire and the AWS Summit – here are our headline takeaways:
SAP Sapphire
• SAP reinforced its new “flywheel” model, enabling clients to continuously create value by connecting data from core SAP applications (S/4HANA, SuccessFactors, Ariba, etc ) with intelligent tools like Joule AI and analytics dashboards This integration transforms data into actionable insights, recommendations, and automated workflows – promising up to a 30% boost in productivity.
• Significant updates were announced for Joule, which is now embedded across all major SAP applications as an always-on, proactive assistant. Joule seamlessly integrates with both SAP and non-SAP environments, including enhanced connectivity with Microsoft 365 Copilot
• SAP unveiled the AI Foundation, a unified platform that consolidates existing and new AI components – such as the Joule Studio, SAP Knowledge Graph, and AI Agent Hub – designed to simplify AI development, deployment, and operations
• Strategic partnerships with AWS, Accenture, Cohere, Google Cloud, Palantir, Perplexity, Capgemini, and Mistral were announced to offer customers cloud flexibility, industry-specific intelligent applications, advanced AI integration, and improved data insights and security.
• The Business Data Cloud was expanded – combining Databricks, Datasphere, Business Warehouse, and SAP Analytics Cloud – to power prebuilt, domain-specific intelligent applications that embed data products and AI to automate decision-making and workflows
• SAP championed its Suite-as-a-Service model, delivering the Business Suite as an integrated, modular cloud offering built on clean-core principles, available via RISE or GROW, and integrated with AI and data tools for perpetual innovation
SAP Outlook: The SAP ecosystem is entering a period of accelerated emphasis on data, AI, and modular cloud delivery With expanded partnerships and embedded AI across all core applications, customers can expect faster time-to-value, greater deployment flexibility, and richer industry-specific solutions This positions SAP not just as an ERP vendor, but as a central platform provider for the next generation of intelligent, connected enterprises.
HVA M&A Impact Commentary: SAP partner M&A will shift toward firms that can combine SAP platform knowledge with AI, data, and cloud integration expertise, especially in industries where prebuilt intelligent applications can rapidly deliver measurable ROI. Valuations will likely be strongest for those with proprietary accelerators, multi-platform certifications, and recurring service revenue tied to RISE / GROW deployments
AWS Summit
• AWS reinforced its position as the leading platform for enterprise AI agents by launching Amazon Bedrock AgentCore, a platform that simplifies development and deployment at scale, alongside a major expansion of the AWS Marketplace focused on AI agents and related tools
• AWS committed $100 million to the AWS Generative AI Innovation Center, enhancing customer access to expertise and resources for building generative AI solutions
• New customization features were introduced for the entire Amazon Nova family, delivered through ready-to-use SageMaker AI tools with seamless deployment to Amazon Bedrock, enabling enterprise-grade model tuning
• Amazon unveiled S3 Vector Search, a new capability within Amazon S3 that enables fast, scalable, and cost-efficient vector similarity searches directly on data stored in S3.
AWS Outlook: With its deep cloud penetration, growing AI services portfolio, and aggressive investment in AI agent infrastructure, AWS is set to entrench itself as the default backbone for enterprise-scale AI. The ecosystem will likely see rapid expansion in third-party AI tools, industry-specific agents, and hybrid AI-cloud deployments built directly on AWS.
HVA M&A Impact Commentary: AWS’s new product evolutions will boost M&A demand for partners with expertise in AI development, data architecture, and cloud integration. These enhancements will create demand for cloud-focused consulting and managed services firms that can help clients adopt and scale AWS’s AI offerings at an enterprise level
Q2 2025 By The Numbers
IT Services
M&A Activity – Deal Count by Quarter
Q2 2025 Public Markets
Q2 2025 Additional Notable M&A Transactions
• April 2025 – Elevate Technology Partners acquired Auptimal, a US-based firm specializing in data analytics and Microsoft 365 consulting services
DATA & ANALYTICS
• June 2025 – Amplifi (backed by Source Capital) acquired Snow Fox Data, a US-based data and artificial intelligence consultancy
DIGITAL ENGINEERING
ENTERPRISE SOFTWARE CONSULTING
• June 2025 – Altimetrik (backed by TPG) acquired SLK Software, an India-based global technology services firm delivering AI-driven automation, analytics, and digital engineering solutions, for ~$600M
• June 2025 – Ridgemont Partners acquired Unosquare, a US-based provider of nearshore AI-enabled digital engineering and data analytics solutions, from Trivest
• April 2025 – Pythian (backed by Mill Point Capital) acquired UK-based Rittman Mead, an Oracle data and analytics solutions provider
• June 2025 – Argano (backed by Trinity Hunt) acquired Twelve Consulting Group, a USbased Anaplan Gold Partner, after acquiring Anavate Partners (Anaplan Trailblazer Partner) and Real Dynamics (Microsoft Dynamics FastTrack Portfolio Partner) in May
• April 2025 – Magna5 (backed by NewSpring Capital) acquired Shock IT, a US-based MSP and cybersecurity solutions provider
MANAGED SERVICES
• June 2025 – The 20 MSP acquired ADC, a US-based MSP and IT solutions provider, marking its 40th MSP acquisition in the past three years
CLOUD SOLUTIONS
GOVERNMENT SOLUTIONS
• April 2025 – Stefanini Group acquired a 60% stake of Escala 24x7, a Miami-based Premier AWS Consulting Partner in Latin America
• April 2025 – Improving (backed by Trinity Hunt) acquired InfraCloud, an India-based company specializing in AI cloud services and application modernization
• April 2025 – Lockheed Martin signed a definitive agreement to acquire the Rapid Solutions business (focused on Intelligence, Surveillance, and Reconnaissance technologies) of Amentum
• May 2025 – Leidos acquired Kudu Dynamics, a US-based AI-enabled cybersecurity firm serving the Department of Defense, for ~$300M
• May 2025 – Longshore Capital acquired the acquisitive US-based MSP Centaris from Peninsula Capital
• June 2025 – Evergreen Capital acquired Australia-based MSP REDD, marking its 100th MSP acquistion after acquiring Sterling Technology Solutions and PCH Technologies earlier in the quarter
Q2 2025 Recap + H2 2025 Outlook
While IT Services transaction activity declined in Q2, the sector continues to see healthy levels of M&A, with deal values and multiples increasing quarter over quarter. This aligns with the broader market trend – although deal volumes have declined, overall deal value remains elevated as top-tier assets continue to trade at premium valuations. Growth in data center spend highlights the rapid rise of AI adoption by both businesses and consumers, while data and enterprise software consulting have seen a slowdown as companies delay investments and defer projects amid supply chain challenges and rising costs The second half of the year is likely to follow a similar trajectory unless there is a major shift in macroeconomic conditions.
Even so, M&A activity should remain robust, driven by urgent demand for generative AI and broader AI-enablement capabilities. Private Equity firms still have ample capital to deploy and are exploring creative entry points into IT Services, while also demonstrating a willingness to be competitive for the right assets. Strategic buyers are expected to sustain M&A activity, rooted in the need to acquire enterprise-grade capabilities in AI, data analytics, cloud, and cybersecurity. Demand for specialty consulting firms that support platforms such as AWS, Google Cloud, Azure, Snowflake, Databricks, ServiceNow, and Salesforce is persistent as larger consultancies strive to enhance cross-sell opportunities and keep pace with ongoing platform rollouts
Top-Tier Asset Profile
Attractive End Market Focus: Financial Services, Healthcare, Education, Government
Delivery Resources Enterprise Client Credentials
Diversified Client Base High Recurring Revenue / Revenue Visibility
HVA IT Services + Digital Transformation Expertise
About Harbor View Advisors
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