Confidence is returning to M&A in the technology, communications and IT services market

Buyer appetite remains strong, but quality, preparation and strategic fit matter more than ever

After a quieter period for M&A, there are clear signs that confidence is returning across the technology, communications and IT services market.

Economic uncertainty, interest rates and increased taxation have all contributed to lower deal volumes, with the first quarter of the year recording the lowest number of deals for three years. However, recent research with more than 30 buyers across the MSP, communications and cloud services sectors suggests that appetite for acquisitions remains strong.

The message for business owners is encouraging. Buyers have not disappeared from the market. They are still active, well-funded and looking for the right opportunities. What has changed is the level of scrutiny. Strong businesses with clear growth potential, quality earnings, good people and a compelling strategic position remain highly attractive.

What the research tells us

The findings point to a market where buyers are being selective, but remain committed to M&A as a route to growth.

Of the buyers surveyed:

• 77% had completed at least one deal in the last year
• 93% were looking to complete an acquisition over the next 12 months
• 70% were looking to complete multiple deals
• 83% had debt facilities and/or sufficient cash available to fund acquisitions
• 86% were actively searching for the right acquisition opportunity

For shareholders considering a sale, this suggests there is still meaningful demand in the market. However, it also reinforces the importance of preparation. Buyers are active, but they are looking carefully at quality, resilience, growth potential and strategic fit.

Growth is driving buyer behaviour

While scale remains important, the research suggests buyers are not simply acquiring to reduce costs. Instead, many are looking for businesses that can help them grow, strengthen their customer proposition and build capability in key areas.

Increasing EBITDA was ranked as the most important factor by 24% of buyers. However, 62% cited organic growth, access to a vertical market or expertise in a new technology as their main driver for a deal. The quality of people was also highlighted as a key acquisition driver by 21% of buyers.

This matters because it changes the conversation for business owners. A buyer may be interested not only in your financial performance, but also in your customer relationships, technical expertise, recurring revenue, sector specialism and the strength of your team.

In a market where technology and communications channels continue to converge, buyers are looking for businesses that help them stay relevant, broaden capability and deliver more value to their customers.

What this means for business owners

If you are considering a sale, investment or succession event, the current market presents both opportunity and challenge.

There is active buyer demand, but the best outcomes are more likely to be achieved by businesses that are well prepared. That means being able to demonstrate the quality of your earnings, the strength of your management team, your customer base, your growth story and the strategic value you bring to a potential acquirer.

It also means understanding which buyers are most likely to value your business properly. The right buyer is not always the most obvious one. In many cases, value is created by identifying strategic acquirers who see what your business could help them become.

Preparation can make the difference

For business owners, now is a good time to assess whether your business is ready for a future transaction.

Important questions include:

• Is your financial information clear, consistent and reliable?
• Can you demonstrate recurring or repeatable revenue?
• Are customer relationships well documented?
• Is there a strong management team beyond the owner?
• Can you explain your growth story clearly?
• Do you understand which buyers are most likely to value your business?
• Are there any issues that should be addressed before going to market?

These questions are not just process points. They can directly affect buyer confidence, valuation and deal deliverability.

How K3 Deal Advisory can help

K3 Deal Advisory works with entrepreneurial business owners who are considering sale, investment, succession or strategic growth options.

We help business owners understand the value of their business, assess buyer appetite and prepare for the market with confidence. Our team combines sector experience with access to a broad network of buyers, investors and funders, helping clients identify the right opportunities and make informed decisions from the first conversation through to completion.

In a selective market, preparation, positioning and buyer access matter. We help business owners bring those elements together, from the first conversation through to completion.