IT Services Valuation Multiples: 2015-2025

IT services companies often command higher valuation multiples than other industries due to the secular growth of the IT sector and firms’ ongoing digital transformations. The underlying tailwinds of the market make IT services companies attractive targets, leading to higher valuation multiples and premium prices when sold.

“Whether you’re planning to sell your IT business or explore an acquisition, understanding current valuation multiples is crucial for making informed decisions” says Filip Drazdou at Aventis Advisors

But not all IT companies are created equal. Factors such as size, growth potential, and profitability all affect the price potential buyers are willing to pay. 

If you want to improve the exit valuation of your business, you must take the time to understand what determines valuation multiples of IT services companies. You can then optimize critical metrics of your business to achieve a higher sale price for your business. At Aventis, we see that revenue growth continues to be the most important driver of valuation, alongside healthy EBITDA margins in the 10% to 15% range, for IT services firms.

In this article, we delve into the valuations in IT Services M&A transactions and provide a roadmap that shows buyers and sellers what multiples to expect in this industry. We also examine the valuation of public IT Services companies, including what has driven their impressive boom and bust cycle over the past nine years.

Table of Contents

I. IT Services Valuation in M&A Transactions

II. IT Services Valuation in Public Markets

III. 2024 IT Services Outlook

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IT Services Valuation in M&A Transactions

We analyzed over 8,000 IT Services M&A transactions between 2015 and 2025, looking at deals in both public and private markets. Of these, roughly 770 have disclosed valuation multiples, such as EV/Revenue or EV/EBITDA.

Our focus was to analyze how the multiples have changed, and further explore two of the most important factors influencing tech companies’ valuations: their size and location. 

Companies in the sample are mostly IT services businesses, software developers, MSP providers, systems integrators, and other professional services firms focused on IT.

EV/EBITDA vs EV/Revenue Multiples for IT services

The most common valuation method found when analyzing IT services companies is the EV/EBITDA multiple. This is because IT services companies don’t require significant upfront investments and are expected to generate positive cash flows early on.

Sometimes, the revenue multiple is used in a supporting role. For example, if a company hasn’t reached a normalized level of profit or is experiencing temporary earnings instability distorting the underlying profitability of the business. According to Marcin Majewski at Aventis Advisors, “IT services companies are ultimately valued on their EBITDA, and business with little or no EBITDA are very difficult to sell”.

Below is a summary of disclosed valuation multiples paid in IT Services M&A transactions between January 2015 and 2025.

A median EV/Revenue multiple of 1.4x and EV/EBITDA of 11.4x implies a margin of approximately 13%, consistent with most listed professional services firms.

Average EV/EBITDA Multiples for IT Services Companies

From the 480 deals in our sample for which the EV/EBITDA multiple was available, the median EV/EBITDA amounted to 11.4x. This number has remained fairly stable in the last 9 years, fluctuating between 10.3x  and 12.9x.

In 2024, the median multiple for transactions reached a peak at 12.9x, up from 9.1x from 2020. In our latest Q1 2025 update, the median EV/EBITDA multiple was 11.5x.

Average EV/Revenue Multiples for IT Services Companies

Between 2015 and 2020, median revenue multiples remained stable, hovering between 1.1x and 1.5x. They steadily rose from the end of 2020 and throughout 2021, more than doubling by the end of 2022. By 2023, however, they decreased back to pre-pandemic levels at 1.5x. In 2024, the revenue multiples paid in IT Services M&A transactions increased only slightly YoY to 1.5x. This continued in 2025 when median revenue multiple stood at 1.6x.

IT Services Multiples Over Time

Valuation multiples in IT services M&A transactions were remarkably stable over the analyzed period. Changes in EV/EBITDA multiples were minimal and even the 1st and 3rd quartile figures barely moved, except for the boom-and-bust years of 2021 and 2022.

EV/Revenue multiples followed a similar pattern but continued to rise throughout 2022 increasing from the previous 1.0-1.5x level to 2.0x. They steeply declined in 2023, however, reaching 1.2x by the end of Q4. In the first half of 2025, revenue multiples recovered to a median of 1.6x.

Our combined data shows that the jump in private transactions wasn’t as strong as in the public markets, where the one-year increase in average revenue multiple exceeded 100%. Nevertheless, there was a big difference in the median revenue multiple between 2020 and 2022: +0.8x or roughly 100%. The valuations in the 1st and 3rd quartiles also rose markedly.

One crucial factor is the rise in private equity activity. Among more than 700 deals since 2015, over 15% were closed by PE/VC investors. For example, in 2021, Carlyle Group bought Hexaware Technologies for $3B. In early 2022, Inetum SA was acquired by Bain Capital and Renaissance Partners for more than $2B.

However, financial investors are not only targeting large-scale transactions  Many buyers also look for smaller companies. In our sample, we found the median size of a PE/VC deal to be $50 million with 25% of deals not exceeding $13 million.

Size Effect on Valuation Multiples

Company size is a critical factor in determining the valuations of IT services companies. Although professional services companies tend to have similar business models, regardless of their size, their valuation multiples vary widely.

Our data reveals that small companies (deal size under $5 million) trade at significantly lower multiples, with a median of 0.7x revenue and 5.9x EBITDA. In contrast, deals between $50 million and $100 million command multiples nearly twice as high, reflecting greater investor confidence and scale advantages.

Usually, larger professional services businesses carry lower risk profiles. Big companies can serve larger enterprise accounts and have enough staff and  software to manage complex, large-scale projects. Their development and HR processes are more advanced. Because their customer base is more diverse, losing a single large account does not cause a significant revenue decline. A large company’s team – one of the crucial intangible assets of a company – is less vulnerable to disruptions from key personnel departures. 

Moreover, potential buyers usually have a defined investment mandate. Private equity investors typically have a minimum revenue threshold or deal size, leading to more intense competition for larger transactions. Meanwhile, strategic investors look for deals where the combination of value and potential strategic impact justifies the acquisition.

Location Effect on Valuation Multiple

The geographic location of a company’s headquarters can significantly impact its valuation. 

Our analysis shows that IT services companies based in Europe, North America, and Asia tend to command comparable EV/EBITDA multiples, typically ranging from 10x to 14.3x. However, for companies headquartered outside these regions—particularly in emerging markets—the difference becomes more pronounced. These businesses were valued substantially lower, at a median of 7.1x EV/EBITDA.

Several factors contribute to this gap: 

• Limited investor interest and capital availability in less developed markets 
• Challenges in scaling internationally or winning clients from developed economies 
• Higher perceived political or economic risk, which dampens buyer appetite and reduces valuations

Naturally, North America accounts for many of the largest transactions, with a median deal size of $85 million, compared to $41 million across the entire sample. The United States remains the dominant market, backed by its historically strong technology ecosystem and the world’s deepest pool of institutional investors.

One caveat: many companies are legally registered in the U.S. and maintain a commercial presence there, but conduct most of their operations in emerging markets.

Interestingly, Asia recorded the highest valuation multiples, even surpassing North America. This likely reflects intense regional investment activity, particularly in China, and a preference for domestic targets over cross-border deals.

IT Services Valuation in Public Markets

We wanted to understand better the valuation of public IT services companies and how they’ve evolved between 2015 and  2025. Our sample group included 36 IT Consulting and Other Services companies (GICS classification) (Link – https://www.msci.com/indexes/index-resources/gics) with  a market capitalization of over $1 billion as of 31 December 2022, when we started this valuation analysis. The companies have since been tracked each quarter.

To get a more segmented view based on operations, we split our sample group into two categories:

1. Software Development: Companies that support clients in digital transformation by designing and building custom software solutions, which are then owned by the client. These firms typically exhibit higher growth rates than traditional IT consultancies.
   
2. IT Consulting:  Companies offering managed services (MSPs) and consulting, often including cloud migration, data analytics, security, workplace support, and the integration of third-party platforms such as SAP, Microsoft Dynamics, and Salesforce. Many of these companies also act as value-added resellers (VARs) of both software and hardware

Software Development and IT Consulting Valuation Multiples

The median EBITDA multiple of software development companies was consistently higher than that of IT consulting. Both segments had remarkably stable median EBITDA multiples until 2020, at around 14x for software development and 11x for IT consulting.

With the outbreak of the pandemic, the previously stable environment ended, sending valuation multiples on a roller coaster.

The median EV/EBITDA multiple for software development companies quadrupled to 43.3x by the end of 2021. The industry could only hold these record-high valuations for a short time, however. Over the next 12 months, the median EBITDA multiple more than halved, declining to 2015-18 levels of around 15.0x.

We have been closely tracking the  divergence of EV/EBITDA multiples between IT Consulting and Software Development companies. In the first half of 2024, Software Development multiples briefly converged with IT Consulting but then experienced an uptick in Q2, rising to 15.1x compared to 13.6x for IT consulting 

By mid 2025, EV/EBITDA multiples for IT Consulting and Software Development companies have diverged. IT Consulting is trading higher than Software Development firms at 13.0x and 11.2x respectively.

Valuations for IT consulting companies experienced little volatility before the pandemic. Once the world went into lockdown, IT consulting valuations followed a similar path to software development, peaking at 17.1x EBITDA at the end of 2021 and falling to 10.9x in the following 18 months. Revenue multiples followed the same trajectory, growing from 1.4x to 2.9x before falling with minor fluctuations to 2.3x by the end of 2024. 

Public Market Valuation Drivers

1) Revenue Growth

The pandemic rapidly accelerated the demand for both types of services, as evidenced by the massive jumps in the median YoY revenue growths. This created a pull-forward effect with companies advancing their expenditure on digitalization at a large scale. As expected, both segments eventually reached a turning point in the second half of  2021. Their growth rates have been declining since, albeit at a much steadier pace than multiples which halved in just three months.

The median revenue growth for Software Development companies was quite volatile even before the pandemic, but generally stayed around 15-20% overall. In Q2 2020, it recorded its lowest point at around 10%, and peaked five quarters later in Q3 2021 at 38.5%. Since then, it’s been steadily declining and is down by more than 25 percentage points  as of Q4 2024.

For IT consulting companies, median revenue growth was less volatile but also notably lower than that of software development. It fell into negative territory in Q2 2020 at -1.1% but quickly recovered and peaked at 19.5% in Q2 2021. In the preliminary update of Q4 2024, the median revenue growth of IT services was 2.0%.

EBITDA Margin

EBITDA margin has remained relatively stable for software development and IT consulting companies, with a slight upward trend between 2015 to Q3 2023. Companies from both segments typically operated withing a 12-17% EBITDA margin range..

At the end of Q4 2023, the median EBITDA margin for Software Development sharply declined to 13.7%, falling below IT Consulting’s 13.9%. This trend persisted through H1 2024, with Software Development margins continuing to converge with those of IT Consulting, eventually dropping below them in the last two quarters.

During the COVID period , Software Development companies were able to increase prices on the back of the significant surge in demand which led to margin improvements. Starting 2020 at a low of 12.2%, the median EBITDA margin peaked by year end at 17.4%.

The median EBITDA margin of IT consulting companies followed a similar path over the same 12-month period. Its performance more closely resembled what was happening in global markets; however, it only started to proliferate after the dip in Q1 2020. In contrast, software development companies’ median EBITDA margin grew throughout 2020.

Following the steep increase in 2020, median EBITDA margins became more similar for software development and IT consulting companies in 2021-2022. Both groups’ margins stayed at around 15-17%. With a proven and resilient business model, the profitability of IT services companies avoided the swings caused by unprecedented inflation, monetary tightening, and the war in Ukraine.

Market Sentiment

Macroeconomic factors played a significant role in the dramatic changes in valuation multiples.

Technology companies were already major beneficiaries of the digital transformation trend before COVID-19. The pandemic accelerated this shift, as organizations were forced to scale up their digital capabilities quickly.

At the same time, supportive monetary and fiscal policies, along with exceptional investor optimism, pushed IT services valuations to unprecedented levels. However, this momentum reversed in early 2022, following a series of macroeconomic shocks. Inflation, once considered transitory, proved persistent. Central banks responded by rapidly increasing interest rates, raising the cost of capital and discount rates — leading to a broad decline in valuations.

The outbreak of war in Ukraine further dampened investor sentiment. Software development companies were particularly affected, as many of them operate delivery centers in Eastern Europe.

Despite many underlying fundamentals remaining strong, the median EBITDA multiple for software development companies nearly halved in Q1 2022 and continued to decline throughout the year.

IT consulting companies experienced less volatility in their valuation multiples. They were not as exposed to the investor exuberance of 2020–2021. This may reflect the nature of their business: more labor-intensive services, stronger competition, and fewer points of differentiation. These services often resemble commoditized offerings, whereas software development is typically viewed as more specialized and strategic.

2025 IT Services Outlook

• At Aventis Advisors, we expect an improving economic outlook for 2025 with rate cuts and lower inflation that will induce investor appetite for deal making across the board, with IT services being no exception
• There may be an uptick in deal activity in 2025, but any major valuation increases are likely only after rate cuts are implemented
• We expect some IT services segments will hold a higher preference among strategic and financial investors relative to peers:
  • AI consulting and integration: As businesses continue to focus on efficiency, automation, and data-driven decision-making, the demand for AI-powered solutions within IT services is projected to grow. This trend is likely to drive innovation and differentiation among IT service providers.
  • Maintenance projects for enterprise customers: Large Fortune 500 companies need to continue to invest in mission-critical systems.
  • Cybersecurity: More companies are investing in cyber defense, given elevated security risks.
  • Defense: Defense companies and governments have increased budgets, including for development and systems integration.
• Consolidation in certain segments will continue as several private equity-backed platforms are still looking to grow in ecosystems, e.g. Salesforce, SAP, ServiceNow, and Microsoft.
• Managed services is a growing segment of interest for buyers with rollups continuing to emerge on to the scene, e.g. AWS, Broadcom, and more