Digital Services Industry Update Q1’2025: M&A Rebounds fueled by PE and Strategic Acquisition Growth

The Digital Services sector saw an uptick in momentum in Q1 2025, driven largely by Private Equity which significantly influenced M&A through both platform and bolt-on acquisitions. Strategics also remain active, pursuing clear acquisition strategies aimed at strengthening their cybersecurity capabilities and advancing cloud transformation initiatives.

The 15th edition of our Digital Services Industry Update offers a detailed look at recent M&A and fundraising activity, along with key insights into current and emerging trends shaping investment across the sector – including digital transformation, cloud migration, tech-enabled services, cybersecurity, and data-driven business intelligence.

Overall Digital Services M&A activity in Q1 increased, totaling 730+ & $15.8bn+ in disclosed M&A deals, with consistent fundraising transactions at 530+ & $25.9bn+ in disclosed fundraises, including:

• Atlantic Tomorrow acquired BrainSell for an undisclosed amount (Advised by Drake Star)
• World Wide Technology acquired Softchoice for $1.3bn
• Netcompany acquired SDC for $138m
• CGI acquired bjss for an undisclosed amount
• IK Partners has signed an agreement to invest in HSL Compliance, alongside LDC who are reinvesting as part of the transaction
• GCP has realised its investment in Bridewell to an investor group including Oakley Capital, Eurazeo and Sagard NewGen
• DyFlex Solutions raised an undisclosed amount of development capital from Five V Capital
• Cognida raised $15m of Series A-1 and Series A venture funding from Nexus Venture Partners
• Thrive raised an undisclosed amount of development capital from Berkshire Partners
  
  

Sam Levy, Partner at Drake Star, shares his views on the sector and notes: “Despite turbulent macroeconomic conditions, we anticipate the Digital Services sector to continue attracting interest from both Private Equity and Strategic investors, with a focus on resilient and more efficient operational business models. This, coupled with a substantial backlog of Private Equity exits, is likely to drive further M&A activity throughout 2025.”

Download the full PDF below for more insights below.