The IT Midmarket

StartThe IT Midmarket

THE IT MIDMARKET

Our market is the IT sector, and in particular the German-speaking IT-Midmarket (IT SMEs). Match.IT is also therefore an active member of the “Bundesverband IT-Mittelstand”, the German federal association for IT SMEs.

The German IT Midmarket currently contains more than 9,852 IT companies, each employing between 10 and 499 staff (BITKOM IT SMEs report 2018). These companies employ a total of over 445,155 people subject to social insurance, making up 56% of all employees in the IT sector. IT SMEs achieve a turnover of more than 68 billion euros (BITKOM IT SMEs report 2018).

The IT Midmarket is a key trendsetter and growth driver for the German economy. The IT Midmarket includes a wide range of highly competent and specialized companies in the following sectors:

IT system houses
IT service providers
IT and management consultancies
System integrators
SAP consulting companies
Software engineering firms
Software companies
Hardware manufacturers
IT distributors
Cloud providers
Hosting providers / data center operators
Managed services providers
Digital agencies
Engineering firms specializing in embedded software
High-tech and IoT providers

IT SMEs in the difficult context of consolidation and digitization

The IT Midmarket is a key trendsetter and growth driver for the German economy. It is currently being shaped by a challenging context of consolidation and digitization.

Consolidation is already in full swing. Many IT companies were founded in the 1980s and 1990s, and their founders (who have since become part of the 50+ “silver age” generation) are now starting their search for successors. Cost and margin pressures are also increasing for traditional IT business, and strategic IT players are making massive purchases to expand their market position. Many well-known company names have disappeared from the IT market in recent years.

Digitization, on the other hand, is about rapid innovation and huge potential for growth. However, increasingly short innovation cycles again require ongoing investments and a consequent re-design of the existing traditional business models. Sooner or later, many small and medium-sized IT enterprises become unable to handle all of these change processes alone, as they are quite simply reaching their limit and can no longer keep up on all fronts. One additional constraint here is also the battle for qualified resources on the labor market.

In many cases, therefore, this results in IT SMEs looking for strategic partners and investors. An owner docks his company to a larger one and is thus able to make use of their infrastructure and sales channels without losing the flexibility of their medium size. Ultimately, as a company founder and owner, this simply means steering your life’s work into a safe haven as becoming stepwise part of a larger enterprise.

The question now is how an IT SME can find the right strategic investor amongst the sea of possibilities.

This is where match.IT comes in: as an M&A consultant, we support the owners of IT SMEs throughout the entire M&A process, from strategy development to finding the right partner through to successful contract negotiations and post-merger integration.