October 2017: Consulting M&A Update

By Ramone Param, Associate Director, Equiteq

There was notable activity in October from a range of prolific acquirers of consulting firms, particularly those active within the IT Services segment. Major deals included DXC Technology’s acquisition of Logicalis SMC, Orange Business Services’ acquisition of Business & Decision and Office Depot’s acquisition of CompuCom. There were also two notable digital acquisitions announced by Cognizant and three healthcare-focused deals announced by Atos. Equiteq was also pleased to advise VISEO on their acquisition of Singapore-based IT Services firm NAIT Consulting and property consulting firm McBains Cooper on their sale to RSBG.

Selected Consulting M&A announced in October:

Note 1: Based on data from CapIQ. Valuation multiple based on LTM FY17 revenue.
Note 2: Based on data from CapIQ. Valuation multiple based on Jun-17 proforma revenue.
Note 3: Based on data from PitchBook. Valuation multiple based on FY16 revenue.

DXC Technology acquires Logicalis SMC, expanding its global ServiceNow practice

DXC Technology announced its acquisition of Netherlands-based service management specialist Logicalis SMC. The acquisition follows DXC’s acquisition of 740-person Microsoft Dynamics 365 consulting firm Tribridge in July. Logicalis SMC was the first European company to become a ServiceNow Master Solutions partner and is expected to be integrated into DXC’s ServiceNow practice within Fruition Partners. Fruition Partners was the largest independent ServiceNow consulting firm before it was acquired by CSC in 2015. It later became part of DXC following the merger of CSC and the Enterprise Services unit of Hewlett Packard Enterprise in April. The acquisition of Logicalis SMC is expected to enable DXC to better address the need amongst enterprise clients for better and more efficient service management capabilities. 







Atos acquires three healthcare IT consulting businesses in the US

Atos announced that it acquired Pursuit Healthcare Advisors, Conduent’s Healthcare Provider Consulting and Conduent’s Breakaway Group. The three acquisitions bring Atos expertise within technology adoption, project management, Electronic Health Record implementation and optimization capabilities, and population health and analytics. The deals follow Atos’ acquisition of Anthelio Healthcare Solutions last year and better positions the French technology services player to capitalize from the substantial opportunities for advising providers and payers around a range of issues in the unsettled US healthcare sector. Around 400 healthcare consultants will join Atos as part of its recent acquisitions and the firm now expects to generate over €1bn in revenue annually in the healthcare sector.





Cognizant acquires two European digital consulting businesses

Cognizant announced that it will acquire UK-based Zone and Swiss-based NetCentric. Zone is a digital agency offering a range of digital strategy and design services, and was recognized as the Agency of the Year in 2016 by the British Interactive Marketing Association (BIMA). Its clients include blue-chip names like Adidas, Aviva, Barratt Homes, Deutsche Telekom, Maersk, Marks & Spencer, and Unilever. Netcentric is a customer experience consulting firm and a leading independent Adobe partner in Europe. The business works with notable clients like Allianz, Mercedes-Benz, Miles & More, Raiffeisen, Swisscom and UBS.

Both deals are expected to add over 600 people to the technology services buyer’s global team and better position it to compete against rivals who are rapidly building capabilities at the intersection of business consulting, technology and marketing. At the end of last year, activist investor Elliot Management expressed concerns about Cognizant’s level of acquisitions in the digital space in comparison to its highly acquisitive competitor, Accenture. The Times of India recently announced that Cognizant and Apax Partners are among shortlisted suitors for a potential acquisition of digital technology firm LiquidHub for as much as $600m.






Orange Business Services acquires Business & Decision

Orange Business Services announced at the end of the month that it has entered into an agreement to acquire data and digital services specialist Business & Decision.  Orange Business Services is the brand used by telecoms operator Orange to offer its global IT and telecommunication services. Business & Decision is a Euronext Paris-listed leading player in Business Intelligence and CRM. The business has 2,500 employees in France and internationally. The deal forms part of Orange Business Services’ strategy to become a global player in digital transformation and a leader across data services. The acquisition is of a majority stake of 63.98% in Business & Decision and the takeover bid represents a premium of 34% compared to the average share price over the 12-month period preceding the announcement of exclusive negotiations.

Important Notice: This article has been compiled using our daily activities in the industry that provide us with unique market intelligence, along with various third party information sources. In many cases, valuation metrics and other deal data has not been confirmed.

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