Impact of Interest Rate Rises

Insights by Robert Fiske.

We have just published the latest ‘state of the market’ review of the UK Software and IT services (SITS) for the first 6 months of 2023. The findings indicate a slowdown in M&A activity following the interest rate rises over the last couple of years. However, the current level of activity does still represent historical norms, so it is very much business as usual here at Prism.

It is not surprising that rising interest rates should have some effect, indeed the Bank of England would be disturbed if they did not, but there is no shortage of credit available at the right price and this supports continued acquisitive growth.

The report also includes a special feature on cyber security – one of the most active parts of the sector. It is our opinion that cyber security services are often poorly provided in the SME market and so a potential source of growth for many IT support companies.

Here at Prism, we definitely felt a lull during the summer months but are now full-on and looking forward to an excellent end to the year. Despite the prevailing macro-economic mood music, it is interesting to note that Microsoft’s latest results were above market expectations, with Azure cloud services showing particular strength. Often the big hitters are bellwethers for market confidence and we have no doubt that the SITS sector will continue to be buoyant despite recent blips in M&A activity.

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