The three valuation archetypes redefining IT services M&A
Why did Coforge pay 3.9× revenue — and 20.6× adjusted EBITDA — for Encora, while a major Indian IT services firm paid 0.3× revenue for a European technology consulting business, both deals announced within months of each other? The answer is not about deal size, geography, or market conditions. It is about acquisition archetype.
For years, IT services M&A has been analysed as a single cohort — "IT services multiples" benchmarked against a blended average of transactions with fundamentally different strategic rationales. That framework is breaking down. Three distinct valuation archetypes are emerging that are better predictors of deal pricing than sector classification alone.
Understanding which archetype your business falls into is now the most important input to understanding what a buyer will pay for it.
The three archetypes
Capability Acquisition
Buying what the acquirer cannot build fast enough
Buyers pay on revenue not EBITDA because they are acquiring a capability multiplier — the earnings will come after integration. The multiple reflects strategic scarcity not current profitability. Coforge paid 3.9× revenue and 20.6× EBITDA for Encora because Encora brought AI-native engineering, an agentic AI platform, and LATAM near-shore delivery that Coforge could not build organically in time.
Multiples expanding in 2026 as AI capability scarcity intensifies. Best-in-class AI engineering assets and platform ecosystem specialists trading at the high end of the range.
Hybrid Platform Acquisition
Recurring managed services with embedded IP and consulting
Stable PE demand for managed services roll-ups. Cyber and healthcare verticals are commanding premium multiples in 2026. PE-backed platforms completed hundreds of MSP acquisitions in 2024 and 2025.
Access Acquisition
Buying relationships, geography, or regulated-market entry
Buyers are acquiring access — client relationships, geographic presence, or regulated clearances — not earnings quality. Revenue is the most honest metric because EBITDA in these models is often thin and inconsistent. A disciplined buyer pays the correct market price for what is being acquired. The alternative — overpaying for access — has historically destroyed significant value.
Multiples under moderate pressure in 2026 as GCC demand moderates and buyers become more selective about pure staff augmentation businesses. Disciplined acquirers continue to transact at appropriate access multiples.
What happens when buyers confuse archetypes
In 2018 Atos acquired Syntel — a $924M revenue IT services business — for $3.4 billion, representing approximately 3.4× revenue. Industry data shows the prevailing EV/Revenue median at the time of the transaction (2018) was approximately 1.4×. Atos paid more than double the market median.
Syntel's rationale was described as a capability and North American market access acquisition. In practice it delivered primarily access — client relationships and offshore delivery — not a transformative capability layer. Within five years Atos was undergoing major restructuring proceedings and has reported significant goodwill impairments.
The lesson: a business that is fundamentally an access acquisition does not become a capability acquisition because the acquirer needs it to be one. Archetype is determined by what is actually being acquired, not by the strategic narrative around the deal.
What this means if you are a founder considering a sale
If you go to market positioned as a generic IT services business you will receive generic IT services pricing — the 1.3× revenue median. Buyers have become sophisticated at archetype identification. They will classify you whether or not you do it yourself. Better to arrive knowing which archetype you are and why.
A cybersecurity managed services firm with recurring revenue and proprietary tooling is a Hybrid Platform acquisition — regardless of the fact that it sits in the IT services sector. A large staff augmentation business with enterprise clients in a regulated vertical is an Access acquisition. The strategic rationale of the buyer determines the archetype, not the industry classification.
Moving from Access to Hybrid Platform by building recurring contracted revenue, adding a tooling or IP layer, and deepening vertical specialisation is achievable. It is a 12–24 month programme that materially changes your multiple. For most founder-led IT services businesses it is the single highest-ROI activity in the 2–3 years before a planned exit.
At 3.9× EV/Sales and 20.6× EV/Adjusted EBITDA, Coforge paid India's largest-ever IT services acquisition price for Encora. This is a real data point for what AI-native engineering capability commands in 2025–2026. It also sets a new expectation that AI capability claims will be scrutinised in diligence — buyers have seen what genuine AI-native businesses look like.
"If a strategic buyer looked at your business today — what would they say they are actually acquiring? Capability, platform, or access?"
Your honest answer to that question tells you more about your likely valuation multiple than any financial metric alone.
What archetype is your business — and what is it worth?
ILLUM Pulse applies a three-layer valuation framework — including subsector archetype adjustment — to your specific business. Free Pulse Score in 5 minutes. Full valuation range, M&A readiness score, and 90-day action plan from $33/month.
Kunal has advised on $11B+ of TMT M&A transactions across North America, Europe, and Asia Pacific over 22 years. ILLUM Pulse is built on the same transaction database and methodology used in ILLUM Partners advisory mandates.