TA Associates just made a majority investment in Bomgar, a provider of enterprise remote support to more than 8,000 corporations around the world. TA's investment is part of a growing trend among PE investors: no fewer than 97 deals with IT services companies worldwide were completed last year, capping off years of slow but steady growth. 2007 and 2008 saw 78 and 79 deals, respectively, before a sharp decline in 2009, which logged only 56 deals. However, activity resumed to 76 deals in 2010 and steadily grew thereafter.
PE firms' enthusiasm for the industry makes sense; after all, in an increasingly computer-run and online world, supporting and maintaining domains, computing systems and mobile devices matters now more than ever. And while there's usually in-house IT on hand at most companies, outsourcing IT consulting and support to a unified platform helps consolidate operations considerably. And that's just the IT consulting and outsourcing part of the IT services space; companies like Go Daddy and Endurance International, which are best known for providing Web hosting and domain registration services, account for some of the biggest deals.
A few other observations:
1. The space is regionally diverse, with the Mid-Atlantic, Northeast and West Coast accounting for 17%, 15% and 14% of deal flow, respectively.
2. Most active investor in the space: ABRY Partners, with 14 deals since 2007.
3. Deals in the space are usually valued at under $500 million, with more than half every year since 2007 occurring below $100 million. There are a few big standouts, like Go Daddy's LBO in 2011, but overall, the lower market and lower-middle-market are where the IT services crowd hangs out.