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2022 BPM M&A Environment: Surge in Add-On Acquisitions and PE Dominance in Large Deals - Blog 2
2022 BPM M&A Environment: Surge in Add-On Acquisitions and PE Dominance in Large Deals - Blog 2

October 16, 2023

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Introduction

In 2022, we witnessed a 2X increase in the number of add-on acquisitions compared to 2021. Furthermore, capital deployment surged significantly, experiencing 7-8 times increase when compared to 2020. In the large deal category ($500 Mn+), Private Equity (PE) played a dominant role, commanding a 57% share in 2022.

Source: Nasscom EY report - A Year Of Paradoxes: M&A Trends And Outlook In The Technology Services Sector

Note:

CX – Customer Experience

CX Digital includes contact centre with digital capabilities such as an omni channel customer.

experience and embedded with technologies such as automation, analytics, AI.

CX Legacy includes traditional customer contact centre with minimal or no digital capabilities.

 

Themes in BPM segment

Sector Consolidation: The year 2022 witnessed significant sector consolidation, marked by mega mergers and increased competition. This trend is expected to continue, particularly in Revenue Cycle Management (RCM), as companies aim to expand their service offerings and incorporate new technology capabilities.

CX Focus: There was a heightened emphasis on talent acquisition, with M&A investments directed towards acquiring multi-shore delivery capabilities, enabling gig-work strategies, and enhancing HR tech and talent management capabilities. Buyers prioritized the acquisition of digital, consulting, and experience design capabilities to drive non-linear growth.

BPM - Horizontal Expansion: Companies continued to invest in expanding business functions such as accounting, procurement, and human resources. A notable shift was observed towards offering suite-solutions rather than point-solutions to accommodate overlapping use cases that require both digital capabilities and BPM services.

BPM - Vertical Specialization: Active buyer participation was observed in RCM, with contributions from both strategic buyers and PE investors. Specialized providers with AI-enabled systems and process automation tools gained market share, particularly in high-growth sectors such as finance, banking, insurance, and healthcare.

 

Conclusion

In summary, 2022 was a year marked by a strategic focus on acquiring digital capabilities, expanding multi-shore delivery, and consolidating within CX. The RCM sector witnessed substantial PE investments and portfolio roll-ups. Diversified BPM and CX players prioritized M&A activities to enhance their domain expertise and digital capabilities. Talent acquisition emerged as a central theme across various industry segments, with M&A initiatives directed towards expanding multi-shore delivery, adopting alternative talent models, and providing innovative solutions.

Source: Nasscom EY report - A Year Of Paradoxes: M&A Trends And Outlook In The Technology Services Sector

 


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