AI Acquisitions Surge in IT Services M&A Activity
In the fourth quarter of 2025, AI-related acquisitions made a significant mark in IT services M&A with 10 notable deals, despite the overall deal volume remaining steady at 494 transactions for the year. As AI acquisitions serve as market gap-fillers, 2025 is seen as a transitional year, with more AI-related M&A expected in 2026, alongside a focus on cybersecurity and regulatory compliance.
The landscape of mergers and acquisitions (M&A) in IT services is experiencing a significant shift as AI-related acquisitions gain traction. The fourth quarter of 2025 marked the first meaningful AI transactions, signaling a pivotal moment in the sector. Despite the increased focus on AI, the overall deal volume in IT services remains steady.
AI Transactions Mark a New Era
In the fourth quarter of 2025, there were 10 notable AI-related M&A deals. This development highlights a growing trend where AI acquisitions are beginning to serve as gap-fillers in the market. While the total number of IT services M&A transactions reached 494 for the year, AI's impact on overall volume is expected to remain limited in the near term due to the scarcity of AI companies available for acquisition.
2025 is considered a transitional year, with more AI acquisitions anticipated in 2026 as the market continues to evolve.
Shifting Dynamics in M&A Activity
The year 2025 saw a sharp rebound in M&A activity, surpassing pre-pandemic levels. A noticeable shift occurred, with the focus moving from high-growth startups to consolidation. Looking ahead to 2026, cybersecurity M&A is expected to dominate the scene. Currently, there are over 5,000 cybersecurity firms worldwide, with particular attention on General Artificial Intelligence (GenAI) and Operational Technology (OT) security as high-priority areas.
Regulatory and Economic Influences
Regulatory frameworks such as the European Union's Network and Information Systems Directive (NIS2) and the Cyber Resilience Act are having a significant impact on the M&A landscape. These regulations emphasize the importance of trust in AI acquisitions. Additionally, there is a notable shift from capability-driven M&A to sovereign M&A, reflecting a change in strategic priorities.
In 2026, AI, OT, and identity are expected to remain popular areas for M&A activity. However, high interest rates could pose a challenge, potentially impacting the pace and volume of transactions.
Future Outlook
As the M&A landscape continues to evolve, AI acquisitions are set to play an increasingly crucial role. While the number of AI companies available for acquisition remains limited, the demand for such deals is on the rise. The year 2025 is seen as a transitional period, laying the groundwork for more substantial AI-related M&A activity in 2026 and beyond.
Overall, the focus on AI, coupled with a strong emphasis on cybersecurity and regulatory compliance, is shaping the future of M&A in the IT services sector. As companies navigate these changes, the ability to adapt and strategically leverage AI acquisitions will be pivotal in maintaining a competitive edge.