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

By Ramone Param, Director, Equiteq

  • Major deals profiled include Ankura’s acquisition of Navigant Consulting’s DFLT and TAS businesses, Warburg Pincus’ acquisition of Capita’s Supplier Assessment Services business and Capgemini’s acquisition of Adaptive Lab.
  • Equiteq advised The NAV People on its sale to FPE Capital and Dartmouth Partners on its investment from Literacy Capital.
  • The Equiteq Knowledge Economy Share Price Index declined over the month led by falls in the share prices of listed management consulting players.

Madison Dearborn-backed Ankura acquires significant chunk of Navigant Consulting

Target: Navigant Consulting’s global business segments offering Disputes, Forensics and Legal Technology (DFLT) and Transaction Advisory Services (TAS). Navigant is a listed global management consulting firm.

Buyer: Ankura Consulting Group is a US-based business advisory and expert services firm that is backed by private equity firm Madison Dearborn Partners.

Deal Value: $470m (1.5x FY18 revenue)

Deal Insight: Ankura received $100m of development capital from Madison Dearborn Partners in March 2016. Since this investment, Ankura has grown rapidly, announcing four acquisitions prior to this transaction with Navigant. Earlier this year, Ankura notably acquired management consulting firm c3/consulting, which expanded its strategy and operational consulting capabilities across the United States. Its acquisition of Navigant’s DFLT and TAS businesses is Ankura’s largest deal to date and is a significant opportunity to establish its global footprint.

The divestitures to Ankura focuses Navigant’s operations on management consulting and managed services across high-growth industry verticals, including energy, financial services, and healthcare. Navigant realizes c.$370m in net proceeds after tax and transaction-related expenses. Some of these proceeds will be allocated to organic growth and strategic M&A opportunities, which are likely to be focused on building Navigant’s digital solutions.

Warburg Pincus’ funds acquire Capita’s Supplier Assessment Services business

Target: Capita’s Supplier Assessment Services business is focused on supplier risk management, health and safety, and professional services. Capita is a UK-based business process management and professional support services firm.

Buyer: Warburg Pincus is a global private equity firm focused on growth investing.

Deal Value: £160m

Deal Insight: At the beginning of the year, Capita revealed that it may sell some of its non-core businesses after issuing a profit warning, which it blamed on its business offerings being too diverse and complex. Capita later announced a restructuring of its business. Capita indicated that it had received strong private equity interest in some non-core assets and expected to achieve £300m from non-core divestitures in 2018. Therefore, the £160m disposal of Capita’s Supplier Assessment Services is likely to be followed up with further divestments from Capita over the year.

Capgemini acquires Adaptive Lab, continuing to deepen its digital consulting capabilities via M&A

Target: Adaptive Lab is a UK-based 50-person design agency that builds products and services for businesses that are reacting to digital disruption.

Buyer: Capgemini is a France-headquartered global leader in consulting, technology services and digital transformation.

Deal Insight: Adaptive Lab will join Idean’s London studio. Founded in Finland, Idean is a digital strategy business that was acquired by Capgemini in the first quarter of 2017. It now comprises of over 230 digital strategists, designers, and developers across the globe.

Capgemini has acquired a string of IT services and digital consulting businesses over the last 18 months. The most notable of which was its acquisition of LiquidHub at the beginning of the year for €400m, which accelerated the growth of its digital consulting capabilities in North America. The trend mirrors many of the other large technology services players that are continuing to expand their digital consulting skills through acquisitions.

Selected Knowledge Economy M&A announced in June:

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 report, 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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