The IT Services Industry in France
by Arcéane
The French IT market is made up of very large groups, many mid-size companies and also a myriad of small companies. The latter are boosting the M&A market through their ability to grow rapidly and the appetite for external growth they generate among the largest companies and international players who see the French market as a plump and dynamic market.
M&A activity in the IT sector in France in 2023 was directly impacted, for the same exogenous reasons, as other segments of the economy. These reasons generate uncertainty.
Without pretending to give them a chronology or a cause-and-effect link, we can mention geopolitical tensions, the powerful return of inflation which has tended to freeze projects, the no less strong rise in interest rates, and the recurrent shortage of qualified engineers in IT, developers and project managers.
The decline in M&A activity observed in France for year 2023 compared to 2022 (-20% approximately) will have been half as much in the IT sector as in the overall market.
Overall, the French market recorded around 1300 transactions in 2023, for a rough value of €44bn, down -29% and -40% respectively compared to 2022.
GCG member firm
ArcéaneParis, France
Stéphane AubinContact Stéphane
Céline ValentinContact Céline
Hubert de CandéContact Hubert
Trends and sector highlights for 2023 in France:
SaaS: still very popular for the recurrence and predictability of its revenues;
Cloud and Cybersecurity: remain strong levers for the development of the sector in general, as they go hand in hand with the increasing digitalisation of the economy;
BigData: remains a key subject and generates need for more powerful machines (quantic computers)
AI: is present everywhere and very strong initiatives abound. The company that emerged in 2023 is undoubtedly Mistral AI, which markets open models offering a very high efficiency.
In the mid-market segment, there has been a sharp decline in the EBITDA multiples used to value companies. For the smallest companies (<€15m) a 30% discount is observed.
2023 fundraising reached a high level, comparable to pre-covid. The second half of 2023 was very active and fueled by the completion of large-scale fundraising, demonstrating a turnaround of the fundraising market
Under the combined effect of rising interest rates and the return of sanity, valuations are falling by several points of multiples.
Unreason seems to have been abandoned by the players in the sector, at least the buyers and investors.
Fundraising transactions:
Mistral AI raised €385m – Series B: Open AI models
Amolyt Pharma raised €130m (biotech specialised in endocrine diseases)
Pasqal raised €100m to develop the 1000qubit quantum computer of the future
Corporate M&A transactions:
Smart Adserver acquired by Capital Croissance (€267m, advertising management platform)
ESI Group acquired by Keysight Technologies Inc (€121.6m, industry prototype virtualization)
Sopra Steria acquires Amsterdam-listed Ordina (€518m)
Meanwhile, ATOS, the French flagship of the IT services industry, is still fighting since several months for its survival, among dismantling and disputes between partners.
Hesperie Conseil, an IT services company offering organizational consulting and project management, acquired by Taleo Group, a global independent management and delivery advisory group.
Sherlockode, a cutting edge web agency, acquired by Akki, a digital agency that supports its clients in their complex projects, with high business or digital transformation challenges.
