The 5 Most In-Demand Digital Transformation Capabilities Driving Premium Valuations in 2025

IT consulting firms with the right capabilities and positioning strategy are commanding outsized valuations in the current M&A market. Strategic buyers and private equity firms aren’t merely chasing revenue; they’re acquiring firms that offer capabilities and industry vertical expertise critical to their growth plans.

Specialized expertise in areas like cloud consulting, data and analytics, AI and automation, and cybersecurity has become a core driver of deal activity over the past several years. These aren’t just add-on services; they are foundational to how enterprises are modernizing, competing, and scaling. As a result, firms operating in these sectors are consistently outperforming the market on both valuation multiples and buyer interest.

In what is now a more selective M&A environment, capabilities have become the clearest indicator of strategic value. Buyers aren’t acquiring for scale alone; they’re acquiring to fill capability gaps, reduce integration risk, and accelerate their roadmap.

Why Capabilities Increase Value Now More Than Ever

The IT consulting industry has grown significantly over the past 20 years. In what has become a mature and competitive industry, service offerings are increasingly commoditized, and buyers have no shortage of options. As a result, firms can no longer rely on generalist positioning or “superior delivery capabilities” to stand out. To really thrive, firms must demonstrate differentiated capabilities and/or industry vertical specialization that aligns with what customers really value.

The good news is the process of building out the right capabilities and developing industry vertical expertise not only allows firms to realize a higher level of performance but also positions them for a better exit outcome. Because now more than ever, strategic and financial buyers are prioritizing acquisitions that allow them to expand their service offerings into high-growth, high-demand areas and add industry-specific expertise. That’s not to say demonstrating good financial performance and growth on a year-over-year basis isn’t important; it still is and always will be.

Capability 1: Cloud Architecture & Migration

Cloud consulting is not a new, bleeding-edge practice area by any means. But with the continued growth and importance of digital transformation, the demand for cloud consulting capabilities hasn't slowed down. That being said, the days of basic lift-and-shift work are going by the wayside, and firms that are able to formulate strong cloud strategies—and tie those strategies to industry- and business-specific challenges their clients face—are the ones who will win in this area.

Most enterprises have progressed in their digital transformation journey and have graduated beyond initial migration into cloud optimization, expansion, and even re-architecture and cloud-native enablement. These companies want cloud consulting firms that can design, build, and—most importantly—optimize long-term cloud environments. C-level decision makers are also looking for accountability when it comes to cloud security frameworks as well as cost efficiencies.

Because of these shifts in the cloud consulting sector, acquirers are seeking best-in-class cloud consulting firms that possess capabilities around multi-cloud orchestration and management, cloud-native architecture, security and compliance frameworks, and app modernization.

Capability 2: Data & Analytics

Data and analytics now lie at the foundation of nearly every digital initiative, and firms that have strong capabilities in this area are naturally commanding strong buyer interest and higher valuations. But just like cloud consulting, the data and analytics consulting space has progressed, and those with more advanced data and analytics capabilities and practices are the ones who are most in demand.

According to Gartner, 70% to 80% of enterprises are still at a relatively low maturity level when it comes to their data strategy. As organizations begin to mature in this area, demand is shifting away from basic data lake development and business intelligence dashboards to services and solutions that support the development of an organization-wide data ecosystem, as well as the ability to turn data into a true competitive advantage that goes well beyond simple analytics and reporting capabilities.

All of this requires a marriage of strategic advisory with strong implementation capabilities, and the companies that can deliver on the ability to develop end-to-end data architectures, advanced analytics and machine learning enablement, as well as data governance frameworks are those that are most sought after by acquirers—and naturally command higher valuation multiples.

Capability 3: AI & Automation Enablement

AI and automation is, without question, one of—if not the—fastest-growing areas within the broader IT consulting industry. But at the same time, it has become an overused buzzword, with a large number of firms claiming to deliver AI services and solutions.

Global AI spend is growing at roughly 30% CAGR, driven largely by cost reduction and productivity initiatives. Enterprises are looking for firms that can not only deliver these capabilities and tie them to a measurable return on investment but also have the required industry expertise to address the company’s unique business challenges. The proliferation of low-code/no-code platforms and RPA has helped accelerate adoption, which has been a boon for many IT consulting firms.

Because of the rapid growth in this sector, acquirers are targeting firms that can go beyond generic AI services and tackle things like enterprise AI strategy, low-code/no-code capabilities, and the development of industry-specific AI and automation solutions. Firms with strong AI and automation practices are particularly attractive to acquirers because of their ability to demonstrate real scalability and provide strategic acquirers with the foundation to create innovation labs for their customers. The firms with AI capabilities that can show real-world, documented return on investment for their clients—and have developed proven delivery frameworks and IP are at the top of the heap when it comes to M&A activity.

Capability 4: Cybersecurity Consulting

With cyberattacks and regulatory pressures increasing the importance of cybersecurity services and consulting will continue to increase. This is coupled with the fact that enterprise IT environments have become more complex and the financial and reputational costs of data breaches are high. Furthermore, many internal IT teams are understaffed, and cybersecurity services firms fill a high-cost, mission-critical gap. 

Some of the cybersecurity services capabilities that are driving top-of-market valuations include cloud security architecture and implementation, identity and access management (IAM), managed detection and response (MDR), as well as zero trust architecture design.  Additionally, firms that provide managed security services are highly sought after given the recurring nature of their revenue in what is a very in-demand sector. Firms in this latter category are the top performers in the cybersecurity sector, both in terms of valuation multiples and buyer interest.

Enterprise-wide cybersecurity has quickly become a C-level and board issue. Acquirers want firms that will have the ear of the CISO and other C-level decision makers, serving as a tip-of-the-spear entry point into other digital transformation services, and cybersecurity consulting firms typically hit this mark. They also bring a base of sticky, recurring revenue that usually carries high switching costs. 

Capability 5: Custom Software Development

Custom development isn’t dead; it’s simply evolving. While traditional application development and legacy languages have become a commodity, firms that can design and build modern, high-impact systems using AI, ML, low-code/no-code, and advanced data engineering are seeing strong buyer interest.

Acquirers are targeting “modern” software engineering firms because enterprises still require tailored solutions that off-the-shelf tools can’t provide—especially in areas like AI, automation, and data. Additionally, platforms are evolving rapidly, and language learning models, real-time data processing, and low-code/no-code technologies are requiring specialized builds. That, coupled with a shortage of technical talent, is driving demand from acquirers.

The custom development capabilities in 2025 and beyond that are commanding premium valuation multiples include custom AI/ML, and automation solutions; data platform engineering; low-code/no-code development and enablement; as well as DevOps and MLOps frameworks. With a lot of buyer activity focused on these areas, interest is shifting away from practices that offer more generic mobile and web application development with little to no industry vertical specialization.

Ultimately, the custom software development shops that provide the most strategic value—not only for their customers but for acquirers are the ones that go beyond providing these more bleeding-edge development capabilities and are able to develop innovative products for their clients that drive real-world business outcomes and demonstrate strong subject matter expertise within industry verticals or across line-of-business functions.

Being able to deliver on these five capabilities clearly demonstrates strong strategic value, which in turn accelerates the growth of a firm and increases acquirer interest. But at some point, the conversation shifts from what a firm does to how a firm delivers it—because capabilities are only part of the overall equation when it comes to increasing valuation.

Typically, acquirers will pay more for firms that possess one or all of the following traits: deep specialization in one or a small handful of industries; IP and proprietary tools in the form of internally built software or delivery frameworks; and—perhaps most importantly—recurring revenue or long-term contracts.

Acquirers are actively seeking capabilities that represent the future of digital transformation and they’re placing a premium on firms that deliver them in a scalable, differentiated way. But it’s not enough to offer these capabilities—they must be delivered with a clear link to enterprise value. The firms that achieve this aren’t simply marketable—they’re setting the standard for what strategic buyers are paying up for.