May 2019: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals profiled include Orange’s acquisition of SecureLink, Perficient’s acquisition of Sundog Interactive and Tetra Tech’s purchase of WYG.
  • The Equiteq Knowledge Economy Share Price Index dipped slightly over the month.

Orange deepens its cybersecurity capabilities in Europe.

Target: SecureLink is a Netherlands-headquartered provider of security consulting, security maintenance and support, as well as advanced managed detection and response capabilities.

Buyer: Orange is a France-headquartered provider of a range of telecommunications, data transmission and related services.

Enterprise value: €515m (2.1x FY 2018 revenue)

Deal insight:  Orange accelerates its growth in the European cybersecurity market with its acquisition of SecureLink, one of the largest independent services players in the region. Demand for cybersecurity solutions is growing as technology plays a greater role in critical business functions across industries. According to data from ResearchAndMarkets.com, Europe’s cybersecurity market is anticipated to grow at a CAGR of 11.3% and will be worth $47.2bn by 2023.

The purchase of SecureLink follows Orange’s acquisition of UK-based cybersecurity specialist SecureData, which was purchased at the beginning of the year. These deals, along with the acquisition of Business & Decision, form part of Orange’s strategy to become a global player in digital transformation and data services.

Perficient’s acquisition of Sundog follows its announced plan to supplement growth with new M&A.

Target: Sundog Interactive is a US-based provider of marketing and technology consulting services with a specialism in providing Salesforce solutions to the manufacturing sector.

Buyer: Perficient is a US-headquartered provider of digital transformation consulting services.

Deal insight: Sundog’s capabilities will better enable it to service digital transformations across the disrupted manufacturing sector. The deal also deepens Perficient’s capabilities in the growing Salesforce consulting space – an ecosystem in which it is already a Gold partner. This acquisition follows Perficient’s purchases of Elixiter, Stone Temple Consulting and Southport Services Group in 2018.

At the beginning of 2019, CEO Jeffrey Davis said that acquisitions would add $50m to Perficient’s revenue run rate and noted that M&A areas of interest included Pivotal, Oracle and enterprise resource planning. Perficient recently raised its full year 2019 revenue guidance range to between $545m and $570m.

Tetra Tech expands its UK consulting and engineering services with the acquisition of WYG.

Target: WYG is a UK-headquartered global engineering services firm with a focus on planning, water and environment, transport, infrastructure, built environment, architecture, urban design, surveying, asset management, program management and international development.

Buyer: Tetra Tech is a US-headquartered provider of consulting and engineering services.

Deal value: £43.4m

Deal insight: The acquisition of WYG expands Tetra Tech’s presence in Europe, particularly in infrastructure, water and environmental services. The UK is facing a range of headwinds to infrastructure spending, including Brexit uncertainties, delays to Crossrail and the bankruptcy of Carillion. Nevertheless, exciting projects in development like Crossrail 2 and HS2 offer prospects for large infrastructure players positioned in the region.

Tetra Tech continues to be an active buyer at the intersection of engineering services, consulting and technology. Prior to the acquisition of WYG, Tetra Tech had acquired eGlobalTech, a US-based provider of IT solutions, cybersecurity and management consulting services to federal clients.

Selected Knowledge Economy M&A announced in May:

Source: PitchBook, S&P Capital IQ and company press releases

Knowledge Economy Share Price Index

Source: S&P Capital IQ

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