Coronavirus impact: Dip in valuation prompts IT firms to bet on buyouts

Tech firms with niche capabilities are on the radar of IT biggies

service sector, jobs, employment, IT sector

According to investment banking firm, mergers and acquisitions (M&A) activity in the sector was trending down in March because of the unexpected disruption.

Debasis Mohapatra Bengaluru
With valuations coming to a realistic level because of the coronavirus disease (Covid-19)-induced crisis, many IT services firms with sound balance sheets have started exploring the possibilities of acquiring companies operating in niche areas. According to sources in the know, strategy teams of many IT firms have sounded out investment bankers and analysts about opportunities that could be the right fit before conducting any formal due diligence.
Analysts are of the opinion that with enough cash reserves at hand, most IT firms are better placed to overcome the Covid-19 crisis. However, as revenue growth is likely to take a hit, a good acquisition could offset some losses in topline. “Global flight of capital to safety in a strengthening dollar environment

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First Published: Apr 08 2020 | 2:48 AM IST

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