Information technology ended 2020 as the most attractive market for private equity and venture capital deals in the U.S., with 482 entries announced in the fourth quarter, according to S&P Global Market Intelligence data.

In the fourth quarter, bigger amounts across fewer deals characterized the IT sector. Gross transaction value hit $31.73 billion during the fourth quarter, up 97.6% from the same period in 2019 despite a 9.7% year-over-year drop in deal volume. Quarter over quarter, the number of deals in the sector was down 8.5% from 527 transactions, but gross transaction value soared 182.8% from $11.22 billion in the third quarter.

Of the 1,212 deals signed across all sectors during the fourth quarter, IT entries accounted for 39.8%, signaling a strong buy-in for the sector from private equity and venture capital firms despite the economic upheaval caused by the COVID-19 pandemic. A total of 2,138 IT entries were signed in 2020 with a gross transaction value of $65.17 billion, making up the biggest share across all sectors throughout the year.

The largest IT transactions announced during the fourth quarter include Thoma Bravo LLC's proposed acquisition of software and data analytics company RealPage Inc. for a gross deal value of $10.47 billion. Platinum Equity LLC is also poised to buy technology logistics provider Ingram Micro Inc. in a deal worth $7.2 billion, while Francisco Partners Management LP just acquired cybersecurity solutions provider Forcepoint LLC for $1.10 billion in a deal announced in October 2020 and closed earlier in January.

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Other sector performance

The second-largest market for private equity and venture capital transactions in the U.S. during the fourth quarter was healthcare, buoyed by greater demand for products and services during the coronavirus pandemic. Entries announced in the sector during the period came to 237, bringing the total number of healthcare deals for the year to 1,027.

Healthcare deals signed in the quarter drew in $9.26 billion in aggregate value, resulting in the year's total of $37.14 billion. Year over year, healthcare entries were up 32.1% in gross transaction value but deals were fewer by 16.3%.

Communication services took the third spot in terms of the highest deal volume during the fourth quarter, with the sector's 106 entries valued at an aggregate $1.81 billion. Deal volume in the sector was up in the fourth quarter from 97 in the third quarter, but gross transaction value was down from $3.58 billion. The volume and aggregate value of communication service deals in the fourth quarter were lower compared to the comparable 2019 quarter’s 126 transactions worth a total of $3.34 billion.

The number of deals in the industrial and energy sectors declined in the fourth quarter, with entries totaling 97 and five, respectively. Gross values totaled $3.42 billion for industrial deals and $3.01 billion for energy transactions. In the comparable 2019 quarter, the industrial sector pulled in $3.09 billion in aggregate value across 140 deals, while the energy market brought in $500.0 million across eight transactions.

The consumer discretionary and consumer staple sectors also slumped in terms of deal volume during the fourth quarter compared with the year-ago period, as many retail stores and restaurants were shuttered amid lockdowns and uncertain economic conditions stemming from the pandemic.

Consumer discretionary entries were down to 102 from 126 in the 2019 quarter, and consumer staple deals announced fell to 44 from 64 in the year-ago period. Consumer discretionary deals in the fourth quarter were up 18.6% from 86 deals in the third quarter, while consumer staple deals were down 45.7% from 81 transactions in the preceding quarter.