April 2018: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals profiled include Infosys’ acquisition of WONGDOODY, HPE’s acquisition of RedPixie and Wavestone’s acquisition of Xceed.
  • The Equiteq Knowledge Economy Share Price Index achieved robust rises over the period.

Infosys deepens its creative agency skills with WONGDOODY

Target: WONGDOODY is a US-based creative agency with studios in Seattle and Los Angeles providing strategy, research, brand and marketing positioning, creative design, advertising and production services across industries.

Buyer: Infosys is a global listed technology services player headquartered in India.

Deal Value: $75.0m

Deal Insight: This transaction exemplifies two important market trends. Firstly, it demonstrates the convergence of creative media with technology and consulting, as large technology players look to broaden their customer-focused advisory skills and take a larger share of the growing digital transformation consulting market. The deal also highlights the demand from the Indian outsourcers for US-based high-margin capabilities that enable them to build skills further up the consulting value chain.

The deal develops Infosys’ global connected network of Digital Studios to help clients respond to digital disruption of their industries. WONGDOODY builds on Infosys’ acquisition of UK-based product design and customer experience innovator Brilliant Basics, which was acquired last year for c.$9.7m.

HPE acquires RedPixie as it continues building its cloud consulting capabilities

Target: RedPixie is a UK-based cloud consulting and application development firm. The business is specialized in Microsoft Azure-focused public cloud consulting.

Buyer: Hewlett Packard Enterprise (HPE) offers global technology & enterprise products, solutions and services.

Deal Insight: HPE’s acquisition of RedPixie will be sponsored by HPE Pointnext. In May 2016, HPE spun-off most of its enterprise services business, which was merged with Computer Sciences Corp. (CSC). Later in the year HPE announced that it would further restructure its operations with the sale of its software business to the UK’s Micro Focus. After this restructuring, Pointnext was formed as HPE’s remaining services business. Hybrid cloud consulting is a fast-growing sizable market, which appears to be a strategic priority for the business.

RedPixie is believed to have particularly strong relationships with financial services, insurance and healthcare companies. Major clients include HSBC, Legal and General, Schroders, Man Group, Fidelity, Care UK and Aspen. The deal followed HPE’s acquisition of US-based Cloud Technology Partners (CTP), which it acquired last year for an undisclosed sum. CTP also strengthened Pointnext’s hybrid cloud consulting business particularly in AWS and Azure advisory services.

Wavestone strengthens its IT consulting services to financial services clients

Target: Xceed Group is a UK-based IT services business focused on providing transformation technology programmes to large financial services clients.

Buyer: Wavestone is a listed consulting firm that is headquartered in France and operates at the intersection of management consulting and digital & innovation consulting.

Deal Value: £16.5m (1.2x LFY revenue)

Deal Insight: Last year Wavestone presented their 2021 strategic plan. This consisted of four main aims, one of which was to mark up revenue of €100m from their international business. Its acquisition of Xceed provides added capability in London, New York and Edinburgh. The deal also compliments the buyer’s existing expertise in the banking sector, with Xceed highlighting work with large financial institutions including Bank of America, European Central Bank, American Express and JP Morgan. The deal marks Wavestone’s first acquisition since it formed out of the merger of Solucom and some of Kurt Salmon’s European business teams in 2016.

Selected Knowledge Economy M&A announced in April:

Equiteq Knowledge Economy Share Price Index:

Important Notice: 

We have obtained the information provided in this blog from sources which we believe to be reliable, and we have made reasonable efforts to ensure that it is accurate. However, the information is not intended to provide tax, legal or investment advice. We make no representations or warranties in regard to the contents of or materials provided in this blog, and exclude all representations, conditions and warranties, express or implied arising by operation of law or otherwise, to the extent that these may not be excluded by law.

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