IT Services M&A activity Surged 24% in 2006, Driven by PE and India
While much of the M&A activity in 2006 centered on India, the biggest deal of 2006 was the acquisition of call center services provider West Corp for $4.1 billion by an investment group led by private equity firms Thomas H Lee Partners and Quadrangle Group.
Other highlights of IT Services M&A according to CBR include:
- The average size of the top 20 takeovers in 2006 was $795 million, compared to an average of $538 million in 2005 and $550 million in 2004.
- Four of 2006's 10 biggest M&As involved private equity firms: One Equity Partners's $1.3 billion acquisition of business process outsourcing provider NCO Group; Kohlberg Kravis' bought Flextronics Software Systems for approximately $900 million; Veritas Capital acquired Pearson Government Solutions in a $600 million deal.
- Capgemini agreed a pay $1.3 billion for Kanbay International, a US company boasting over 5,000 staff spread across three Indian development centers.
- EDS gained a majority stake in Mphasis.
- India's I-Flex, Patni, NIIT Technologies, L&T Infotech and Helios and Matheson all announced takeovers in 2006.