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

By Ramone Param, Director, Equiteq

  • Major deals profiled include Cognizant’s acquisition of ATG, AlixPartners’ acquisition of Zolfo Cooper’s US operations and SAIC’s acquisition of Engility.
  • Equiteq advised System Partners on its sale to DXC Technology and Mexia on joining Deloitte.
  • The Equiteq Knowledge Economy Share Price Index fell modestly over the month.

Cognizant acquires ATG, expanding its capabilities in the rapidly growing cloud-based Quote to Cash consulting space

Target: Advanced Technology Group (ATG) is a US-based provider of advice on planning, implementing, and optimizing cloud-based Quote to Cash (QTC) business processes and technologies for businesses. ATG is a global Salesforce consulting partner.

Buyer: Cognizant is a US-headquartered global technology services firm.

Deal Insight: Equiteq recently published a guide for the Configure Price Quote (CPQ) industry at Salesforce’s Dreamforce 18. CPQ forms part of the QTC space and it was clear from our research that the space is seeing rapid growth, particularly as it relates to cloud-based solutions that are transforming the sales experience for businesses across industries. The following software players are some of the leaders that have received considerable investments and / or expanded into the space via M&A.

  • Apttus was acquired by private equity Thoma Bravo in September 2018;
  • SAP completed its acquisition of Callidus Software in April 2018;
  • Salesforce completed its acquisition of SteelBrick in 2016; and
  • Oracle completed its acquisition of BigMachines in 2013.

The acquisition of ATG marks Cognizant’s fourth acquisition in 2018. The deal is its second acquisition in the Salesforce consulting space after its recent acquisition of SaaSfocus – an Indian digital transformation consulting business that leverages Salesforce solutions. Salesforce consulting businesses continue to observe strong demand from buyers, as the industry benefits from the growth in the adoption of the latest Salesforce solutions.

AlixPartners acquires Zolfo Cooper’s US operations, following other recent regional acquisitions from the business

Target: Zolfo Cooper’s US business is the regional operations of a financial advisory and restructuring consulting firm.

Buyer: AlixPartners is a global consulting firm addressing client business issues including performance improvement, accelerated transformation, complex restructuring and risk mitigation.

Deal Insight: The acquisition of Zolfo Cooper’s US business follows AlixPartner’s purchase of Zolfo Cooper’s European operations in 2015 and Zolfo Cooper’s Caribbean practice in 2016. AlixPartners’ TRS team will now grow to 350 professionals after its latest acquisition. The legacy Zolfo Cooper business will consist of its Asian operations only.

AlixPartners was acquired by investment firms CDPQ, Investcorp, PSP Investments and Jay Alix through a $2.5bn LBO in November 2016. The acquisitions of much of Zolfo Cooper’s global business will better position AlixPartners against large turnaround and restructuring advisory competitors like FTI Consulting and the Big Four.

SAIC acquires Engility, creating a leading player in the growing North American government-focused technology service space

Target: Engility is a provider of systems engineering and integration services, focused on space, federal and intelligence customers. The business is headquartered in Virginia, USA.

Buyer: Science Applications International Corp. (SAIC) is a technology integrator providing solutions in the technical, engineering, intelligence, and enterprise IT markets to federal customers. The firm is headquartered in Virginia, USA.

Deal Value: $1.6bn (1.3x FY18 revenue)

Deal Insight: The transaction will create the second-largest independent technology player in government services with over 23,000 employees. The buyer highlighted the complementary portfolios, similar cultures, operating models and histories of both business as being drivers for the deal. The acquisition is also likely to be driven by increased defense spending in the United States, particularly as it relates to technology-focused defense spending. This is resulting in contractors vying to build more scale and adjacent capabilities to enable them to bid on larger projects.

Selected Knowledge Economy M&A announced in September:

Equiteq Knowledge Economy Share Price Index:

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