What is driving the rise of mergers and acquisitions in the IT industry in Australia?

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On October 21, global consulting firm Deloitte revealed it had acquired Oracle’s Australian partner Magia Solutions for an undisclosed amount.

On October 12, PricewaterhouseCoopers (PwC) Australia announced that it had strengthened its cybersecurity capabilities after reaching an agreement to acquire WebSecure Technologies Australia, a Sydney-based provider of information security and risk management.

Just a day earlier, Perth-based Microsoft partner Lindentech acquired the web design and marketing company Spinoff Digital.

The previous week, on October 7, it was revealed that Deloitte had signed an agreement to acquire Sliced ​​Tech from Canberra, with CEO Jason McClure to become a partner of Deloitte Consulting and his team of 40 people will join the integrator of Canberra. global systems by the end of the year.

While the Lindentech acquisition may not have been quite on the same scale as the PwC or Deloitte transactions, the purchases are representative of a larger trend sweeping the Australian market, with levels apparently ever-increasing merger and acquisition (M&A) activity in the local technology sector. .

In fact, the upsurge in M&A transactions in Australia is not confined to the IT sector alone. According to Neil McMurchy, vice president of research on growth strategies for analyst firm Gartner, there has been a general increase in this activity across all industries.

That said, the tech sector appears to be getting more than its fair share of deals.

“Investors who are driving this are particularly happy with the technology,” McMurchy said. RNA. “Technology makes money, and one of the clear messages from COVID is that even conservative companies have said, ‘We have to understand the technology, we have to use it. “”

Neil McMurchy (Gartner)Credit: Supplied
Neil McMurchy (Gartner)

The same trend can be seen across Tasman, New Zealand, where the prevalence of easy and relatively inexpensive finance capital is behind the surge in mergers and acquisitions.

In fact, the effects of historically low interest rates can be seen around the world, with a sharp increase in M&A activity in many parts of the world, including Australia.

“It’s not just an Australian or New Zealand problem, there are tons of money going around,” McMurchy said.

And while a brief slowdown caused by delays in acquisition agreements last year due to uncertainty around COVID-19 sees things picking up again this year, the trend is mostly a continuation of ‘an acceleration that has continued over the past four or five years. , according to McMurchy.

Beyond the general increase in M&A activity in various industries globally, it turns out that local tech players tend to have a few special characteristics that help make them particularly attractive acquisition targets for companies. large multinational buyers.

Read more on the next page …



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