IT Services Valuation Index H2 2025: Momentum starting to build for 2026

Translink Corporate Finance’s IT Services Valuation Index for H2 2025 reveals a sector balancing near-term caution against long-term demand drivers. FY25 proved to be a challenging year for the sector, shaped by familiar themes of macroeconomic uncertainty, geopolitical tensions and cautious corporate spending. Despite these obstacles, the sector demonstrated resilience throughout the year, underpinned by longer-term structural demand, more predictable spending discipline and ample private equity capital.

Headline trends

Valuations across IT services were mixed during the second half of 2025. Digital consultancy and transformation showed optimistic signs of recovery as improving macro visibility allowed providers to re-engage clients, whose discretionary spend had paused in H1. In contrast, valuations across general IT services and cyber & data remained stable or declined. Investment activity continued to centre around AI- and cybersecurity-led use cases, with increased focus on practical, ROI‑driven initiatives such as automation, productivity enhancements and cyber resilience.

Sub-sector analysis

Digital Consultancy & Transformation

• EV modestly up from 9.4x to 10.0x LTM EBITDA

Ongoing macroeconomic uncertainty and cautious corporate spending continued to delay large-scale digital transformation projects. Trading across the sub-sector remained broadly flat, reflected in stagnant valuations. In response, larger firms are doubling down on AI and fast-track solutions, challenging traditional consulting models, while continuing to invest in digital strategy and cloud modernisation. M&A activity remained measured, with investors concentrating on businesses with recurring-revenue models and differentiated capabilities in AI and advanced analytics.

General IT Services

• EV down from 15.9x to 14.2x LTM EBITDA

The sub-sector demonstrated continued resilience in H2 2025, easing slightly from the Q2 peak but continuing to outperform FY24 overall. Stronger performers were underpinned by recurring revenues and specialised expertise, while lower-quartile players faced margin pressure, weak new logo sales and poor pipeline conversion. M&A activity stayed steady but disciplined, with a focus on enhancing customer density, cloud capabilities and cross-sell opportunities, alongside selective private equity deployment.

Cyber & Data

• EV down from 21.0x to 18.9x LTM EBITDA

After several years of strong performance, cybersecurity and data-driven services showed signs of cooling, with valuations softening amid tighter procurement, prolonged sales cycles and pricing pressures in competitive tenders. Despite this, underlying demand remained supported by rising threat levels, regulatory scrutiny and increased adoption of AI-enabled security tools. M&A activity stayed steady, with investors focusing on high-quality, differentiated assets with strategic relevance, alongside continued appetite for smaller, low-risk bolt-on acquisitions.

FY25 in review and market outlook for FY26

M&A activity across the broader IT services landscape was selective but constructive in FY25, reflecting a balancing act against the backdrop of tough conditions. Strategic and financial buyers remain focused on high-quality differentiated assets, scalable delivery models and exposure to key growth themes such as AI, cloud computing, and cybersecurity.

Looking ahead to FY26, there are some early signs of optimism. AI adoption is expected to deepen and recurring and mission-critical services are expected to provide a stable base of mid-market growth. Investor interest is likely to persist, focusing on high-quality mid-market assets that expand capability and scale.

About the Translink CF IT Services Valuation Index

Translink Corporate Finance’s IT Services Valuation Index tracks the financial and market performance of 75 listed IT services companies globally, across three core sub-sectors: Digital consultancy & transformation, general IT services and cyber & data. The index analyses valuation trends, M&A activity and investor sentiment to provide insight into the evolving dynamics of the IT services landscape.

With a vast global footprint and deep sector expertise, Translink CF is your partner to get the deal done. Click here to access the IT Services Valuation Index for H2 2025.