IT Services + Digital Transformation
Q3 2025 Update
Q3 2025 Key Trends + Insights
AI, Data + Analytics, & Digital Engineering
As enterprises intensify efforts to embed AI into their operations, interest has surged in companies that combine deep domain expertise, premium technology partnerships, and strong engineering delivery capabilities Firms that can provide data analytics and AI solutions within ecosystems like Databricks, Snowflake, Salesforce, Microsoft, Google, and ServiceNow are especially sought after. Buyers are increasingly focused on engineering-led digital transformation firms that can enhance capabilities across data architecture and infrastructure, low-code/no-code development, AI integration, and end-to-end product delivery. These acquisitions reflect the demand for comprehensive digital solutions that accelerate AI adoption and enable full-stack transformation
Cloud Consultancies
Cloud consulting and managed cloud services remain key drivers of M&A, reflecting prioritization of multi-cloud, hybrid cloud, and cloud optimization solutions. There continues to be robust demand for companies with deep expertise across hyperscaler cloud platforms – including Microsoft Azure, Google Cloud, and AWS – as larger professional services firms and MSPs increasingly need specialized cloud and AI capabilities. Additionally, acquirers are targeting firms that offer managed cloud services augmented with AI and automation, highlighting the premium placed on providers that combine infrastructure management, intelligent automation, and advanced analytics. Cloud consultancies and MSPs that embed AI as a value-added layer atop traditional cloud and managed services are poised to differentiate themselves and capture a competitive advantage.
Cybersecurity Providers & Managed Security Services Providers (MSSPs)
Cybersecurity M&A activity is gaining momentum as organizations of all sizes face mounting pressure to strengthen defenses. Both Private Equity investors and Strategic buyers are concentrating on firms with expertise in cloud-based security and native AI threat detection Recent acquisitions of MSSPs and cybersecurity providers highlight the push for comprehensive security operations and deeper reach into regulated industries Interest is especially high in advanced threat detection, integrated protection platforms, and AI-powered capabilities. Overall, companies that harness AI to drive automation, accelerate detection, and enhance cyber resilience are likely to remain in high demand.
Q3 2025 By The Numbers
IT Services M&A Activity – Deal Count by Quarter
Q3 2025 Public Markets
Q3 2025 Additional Notable M&A Transactions
• July 2025 – Capgemini acquired WNS, an India-based digital-led BPM and BPO with expertise in AI-powered analytics and agentic AI solutions, for $3.3B
DATA & ANALYTICS
• August 2025 – Nimble Gravity (backed by Rallyday Partners) acquired Fog Solutions, a US-based data and AI firm with expertise in Microsoft Azure and Databricks
DIGITAL ENGINEERING
ENTERPRISE SOFTWARE CONSULTING
• August 2025 – Wipro acquired the Digital Transformation Solutions business unit of HARMAN, which specializes in digital engineering research & development services
• September 2025 – Improving (backed by Trinity Hunt Partners) acquired MangoChango, a US-based technology consulting and custom software development company focusing on architecture, infrastructure, and product delivery
• August 2025 – Accenture acquired Neura Flash, a US-based Salesforce and GenAI consulting company with expertise in agentic solutions
• August 2025 – Allgeier SE acquired a majority stake in all5cloud GmbH & Co. KG, a Germany-based leading SAP Gold and GROW partner
• July 2025 – Abacus Group (backed by FFL Partners) announced that it would merge with Medicus IT, creating a massive MSP within the financial services and healthcare industry vertical
MANAGED SERVICES
• July 2025 – Huron acquired Treliant, a US-based MSP and advisory firm focused on the financial services industry
• August 2025 – Seroda Ventures made a strategic majority investment in Evonence, a US-based Google Cloud pure-play consulting firm, which will merge with Cloudnyx.ai as part of the transaction
CLOUD SOLUTIONS
• September 2025 – Presidio (backed by CD&R) acquired transACT Technology Solutions, a UK-based cloud and infrastructure specialist and AWS partner
• September 2025 – AMERICAN SYSTEMS acquired Epsilon, a US-based managed IT and cybersecurity leader focused on serving federal customers
• September 2025 – Convergint (backed by Leonard Green & Partners, Harvest Partners, and Ares Management) acquired A+ Technology & Security Solutions, a USbased MSP focused on the law enforcement, education, and government sectors
• July 2025 – Nautic Partners acquired AccessIT Group, a US-based cybersecurity firm
• September 2025 – Sunstone Partners acquired Clearwater Security & Compliance, a US-based provider of cybersecurity and compliance solutions
• September 2025 – Argano (backed by Trinity Hunt Partners) acquired HyBridge, a USbased specialist in providing cloud-based managed services for Infor and UKG
Q3 2025 Recap + Q4 2025 Outlook
While IT Services transaction activity declined in Q3, the sector continues to see healthy levels of M&A. The prevailing trend was a decline in overall deal volume but an increase in average deal size and total value, signaling a "flight to quality" where buyers are becoming more selective and targeting larger, more strategic assets. The IT spending outlook has strengthened for 2025, driven by the race to build AI infrastructure and growing demand for data center capacity. The integration of GenAI features into existing software suites has increased software spend per product; however, overall software spending growth remains constrained by trade policy changes and broader business uncertainty. IT services spending in 2025 is following a similar pattern: GenAI is driving growth across consulting and advisory, integration and change management, and managed services modernization, but overall spending remains tempered by ongoing business caution. Encouragingly, the “uncertainty pause” that began in Q2 2025 started to ease in Q3, and enterprises are moving forward with both large-scale digital transformation initiatives and targeted modernization efforts – many of which are tied to AI and automation.
The pressing need to expand capabilities in AI, cloud transformation, and cybersecurity remains a key driver of M&A activity in the IT services sector. As clients increasingly demand end-to-end digital solutions, M&A is being used to gain advanced expertise and broaden service offerings. Strategic buyers continue to target firms that can fill critical skill gaps or extend their portfolios, particularly to accelerate the adoption and integration of AI, automation, and digital engineering technologies. Cloud optimization and cybersecurity remain core priorities, reflecting organizations’ ongoing need to invest in these areas Overall, both Strategic and Private Equity buyers are focused on firms that deliver bespoke, enterprise-grade AI and digital transformation capabilities.
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