- Major deals profiled include Tech Mahindra’s acquisition of BORN, DXC Technology’s purchase of Virtual Clarity and Accenture’s acquisition of Silveo.
- Equiteq advised on five completed transactions over the month.
- The Equiteq Knowledge Economy Share Price Index rose over the month.
Tech Mahindra continues its North American acquisition spree with its purchase of digital agency BORN.
Target: BORN Group is a US-headquartered digital contentand productionagency.
Buyer: Tech Mahindra is an India-headquartered provider of IT services and consulting.
Deal value: $95m
Deal insight: Tech Mahindra continues to build its North American digital capabilities with a string of acquisitions. Its purchase of BORN follows the Indian outsourcer’s acquisition of US-based design agency Mad*Pow in July and the purchase of Canadian IT consulting firm Objectwise Consulting in June. Tech Mahindra also recently invested in US-based software development company Altiostar. This significant deal flow from Tech Mahindra over 2019 reflects a notable uptick in activity as compared with the last five years.
The acquisitions of North American digital capabilities by Tech Mahindra reflects a shift for traditional IT outsourcing giants. Most are pivoting their service offering away from their shrinking legacy outsourcing core market and toward the growing digital and innovation consulting sectors. Major outsourcing players are using a blend of organic growth initiatives, early stage investments, and M&A to enable this. Some of the most active traditional outsourcing firms that are purchasing businesses in the digital and innovation space include Accenture, Cognizant and Capgemini, as well as other Indian outsourcing giants like Infosys and Wipro.
DXC Technology builds on its IT transformation capabilities with the acquisition of Virtual Clarity.
Target: Virtual Clarity is a UK-headquartered provider of IT-as-a-Service transformation advisory services.
Buyer: DXC Technology is a US-headquartered provider of IT services and solutions.
Deal insight: DXC and Virtual Clarity have previously worked together on a variety of high-profile engagements. The acquisition of Virtual Clarity marks DXC’s sixth acquisition this year and strengthens its capabilities in modernizing applications and infrastructure, as well as managing transformations to cloud. The deal builds on DXC’s $2bn purchase of Luxoft in January, which enabled DXC to significantly bolster its capabilities in outsourced digital engineering, cloud and DevOps.
DXC Technology was formed in 2016 following the merger of HPE’s spin-off of most of its enterprise services business with Computer Sciences Corporation (CSC). Over the last two years the buyer has restructured its organization with acquisitions of a range of businesses across cloud services, software development and IT services management. In 2018 the firm has also divested its payroll and document processing business and floated its U.S. public sector business, which is now known as Perspecta.
Accenture acquires Silveo to strengthen its Industry X.O practice.
Target: Silveo is a France-headquartered company specialized in supply chain and manufacturing consulting.
Buyer: Accenture is an Ireland-headquartered global IT services firm.
Deal insight: Silveo joins Accenture’s Industry X.O business unit, which uses digital technologies to improve clients’ abilities to engineer products and services, as well as operate industrial facilities. The business is rapidly growing and has been bolstered in Europe by the purchases of German IT consulting firm, Zielplus, as well as Irish consulting and manufacturing services provider for the life sciences industry, Enterprise System Partners.
The acquisition of Silveo particularly strengthens Accenture’s digital supply chain transformation capabilities. These capabilities benefited from the acquisition of US-based SAP consulting partner Intrigo Systems in November 2018. Supply chain management is expected to see increasing digital disruption. Supply chain consulting firms are advising on the utilization of advanced technologies like artificial intelligence, data analytics, cloud technologies and IoT to enhance supply chain management and transformation.
Selected Knowledge Economy M&A announced in November:
Knowledge Economy Share Price Index
Note: The Equiteq Knowledge Economy Share Price Index is the average of Equiteq’s five segmental indices and is the only published share price index which tracks the listed companies within the knowledge economy. The index is continually revised to consider new listed companies and to remove businesses that are no longer relevant in each quarter.