KBS - Managed Service Providers - Market Insight

WHAT IS THE MAIN APPEAL OF THE IT SECTOR TO PRIVATE EQUITY?

Attracted by the sector’s high growth potential and penchant for recurring revenues, private equity houses have flooded into the IT channel in recent years. Having initially picked off larger, £100million-plus targets, PE funds have more recently shifted their focus to the mid-market space.

As a result of this feeding frenzy, there are a plethora of private equity houses who now hold investments in the UK IT managed services sector.

Many of these, including LDC, Bowmark Capital, August Equity, Beech Tree and Livingbridge – back four or more MSPs apiece, and we maintain good relationships with many global funds.

In a pattern that might be considered as “bucking the trend” but not at all unexpected for the sector, deal volume increased in 2020 and again in 2021, despite the COVID-19 pandemic. This is indicative of the fact the pandemic, and the associated trends of remote and hybrid working, was positive for the future of MSPs – a testament to the increased requirement for IT services created by the shift in hybrid working. investors: