Last week, Equiteq held a webinar ‘Does your firm meet the criteria to realize value now?’, attended by business owners from all sectors of the knowledge economy.
The webinar was hosted by David Jorgenson, our CEO; Jerome Glynn Smith, a Managing Director in our M&A practice, and Paul Dondos who runs our origination and buyside efforts globally. We expanded on the rationale for why C-19 may create a unique window to realize equity value, covering the latest on what buyers and sellers are saying and doing, and providing a framework to assess whether your firm has the characteristics to take advantage.
The recording and some key take-aways below. You can contact us directly on firstname.lastname@example.org if you’d like a copy of the materials, or would like to talk through the details and how they relate to your business
Some key take-aways:
Clearly C-19 has caused disruptions, but some market strength has developed and in certain circumstances the current market is favourable for sellers to achieve very attractive deals
Liquidity is at an all-time high with financial investors in the private markets
Evolving competitive landscapes (and the requirement to stay relevant to B2B and B2C customers) will drive growth plans for strategic buyers that systematically involve M&A – Equiteq has close to 20 projects ongoing at the moment with these drivers at the core of strategic interest
The pandemic has provided a strong test of resilience, which will drive demand for well-performing business
Market sentiment will improve as visibility increases, fast
There is already a scarcity of sellers vs. buyers in the market, in particular for assets of quality. Businesses that are pre-prepared to engage with investors and acquirers will benefit
We are seeing some changes in the way transactions are progressing towards closure, including:
Exceptional treatment of FY20 in the structuring of earn-outs
Creative dealmaking to get things across the line
Time may not be on your side to conclude a deal – with potential risks including removal of favourable tax treatment for entrepreneurs, second spike of the virus, geopolitical uncertainty, shareholder misalignment
As you’re all deeply aware, Covid-19 has impacted markets, supply chains, technologies and talent across the Knowledge Economy.
In line with our mission to help owners and sector firms to grow, acquire and realize equity value, over the last month Equiteq has been providing resources to help navigate these difficult times, including:
Our webinar “Protecting your equity value during the downturn”, the recording of which is available here: https://youtu.be/nj9i2CSRGkk (email email@example.com if you would a copy of the slides and our associated 100 Tips book)
Detailed sub-sector reports describing Covid-19 impacts on M&A in management consulting, technology services & outsourcing, HCM, engineering services, and software & SaaS. (Email us for a copy of the report for your industry)
We also know from talking to clients that many firms are continuing to perform strongly through C-19, and proving highly resilient.
While M&A markets have been disrupted, they have not shut down. In fact, for some firms, COVID-19 could create a unique window to realize equity value. Therefore, our next webinar will aim to help owners of resilient firms decide whether to consider M&A now. You can register for that webinar here:
In the meantime, here are some highlights from April and early May:
Knowledge Economy Share Price Index recovered from March lows, in line with broader equity indices. The index is now above the value of 1 year ago, although some sub-sectors are still down.
Major deals. Profiles highlighted are Accenture’s acquisitions of Gekko and Yesler; WhiteSky Labs being bought by CapGemini Australia; and Investcorp Technology Partners acquisition of German cybersecurity software solutions company Avira.
Knowledge Economy Share Price Index:
Note: The Equiteq Knowledge Economy Share Price Index is the weighted average of Equiteq’s six 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 newly listed companies and to remove businesses that are no longer relevant in each quarter.
Accenture acquires Gekko to strengthen its cloud innovation.
Target: Gekko is a Paris-based Amazon Web Services (AWS) business, supporting enterprise migrations and cloud development in end-to-end Intelligent Cloud & Infrastructure services.
Buyer: Accenture, global consulting and technology services, reinforcing its AWS global community of more than 8,000 trained professionals, with over 20 AWS competencies and service delivery designations.
Deal insight: Accenture AWS Business Group (AABG) within Accenture Technology in France, Belgium, Luxembourg, and the Netherlands will reinforce its ability to innovate and transform clients’ businesses in line with evolving customer expectations. With cloud, AI, and DevOps skills more clients will benefit from on-shore AWS fully automated cloud operations and FinOps capabilities. Gekko’s delivery center, with over 100 trained professionals is located in the west of France.
The acquisition will enhance Accenture’s position as one of the leading providers of AWS expertise and cloud transformation in the French market and help more organizations to leverage their journey to the cloud, accelerating their digital transformations, growing their businesses and improving customer experiences.
Despite exceeding $4bn in annual revenue, ServiceNow
continues to grow at a stellar rate as it broadens its software solutions. KPMG
is a Platinum ServiceNow Partner and was named Americas Partner of the Year
2019 and Americas Transformation Partner of the Year 2020. KPMG is undertaking
a multi-year investment program focused on combining KPMG’s deep industry
expertise with expertise in technology ecosystems like ServiceNow, as well as
Workday, Salesforce, Amazon Web Services, Google Cloud, IBM, Microsoft, Oracle
and Alibaba Cloud.
Deal insight: Accenture’s acquisition of Yesler continues to strengthen and scale the company’s B2B marketing services, adding depth in offerings such as account-based marketing, customer advocacy, sales enablement, and marketing automation. With more than 400 people globally, Yesler is headquartered in Seattle and has additional offices in Portland, Philadelphia, London, Toronto, and Singapore. Post-transaction, Yesler will be integrated into Accenture Interactive and further enhance the company’s complete set of B2B services, ranging from strategy and creative to ongoing management and support.
Accenture’s acquisition of Yesler highlights the continued convergence between traditional creative agencies and management consultancies. As brands continue to adapt their marketing and consumer engagement models, it is likely that agency and consultancy offerings will continue to merge and brands will continue to seek out firms that offer a data-heavy, analytics approach to marketing.
Capgemini Australia acquires Mulesoft Partner WhiteSky Labs.
Target: WhiteSky Labs is a leading Australian privately owned Mulesoft Practice.
Buyer: Capgemini is a global consulting firm listed on the Paris stock exchange.
Deal insight: Multinational consulting firm Capgemini has acquired Sydney-headquartered MuleSoft partner WhiteSky Labs for an undisclosed sum. The acquisition expands the consulting giant’s digital transformation capabilities in Asia Pacific while also adding more than 150 staff across Australia, Singapore and the Philippines. Whitesky Labs is one of the largest independent MuleSoft full-service consultancies in the region.
Since being acquired by Salesforce in March 2018, MuleSoft has experienced exceptional growth. For the past several years Capgemini had been quiet on the acquisition front in Australia, but this acquisition may mark the beginning of more deal activity from them.
Investcorp Technology Partners acquires German cybersecurity software solutions company Avira for $180m.
Target: Avira is a leading antivirus and other cybersecurity software solutions business, headquartered in Germany.
Buyer: Investcorp is a Bahrain-headquartered global manager of alternative investment products. Investcorp Technology Partners is a direct private investment arm of Investcorp for European technology companies.
Deal insight: Founded in 1986 by Tjark Auerbach, Avira has grown without external funding to be a well-known brand with a strong position in its markets. The company is particularly well known for its anti-virus suite of products, licensed into the European and Asian OEMs and Consumer markets as own-branded as well as white-label. This acquisition will support the business growth, expansion into new geographies, and development of its comprehensive cybersecurity offering in areas such as anti-malware, threat intelligence, identify management and IoT.
The transaction, which remains subject to anti-trust approval, values Avira at $180m and brings in Investcorp Technology Partners as majority shareholders, with Tjark Auerbach remaining a significant shareholder.
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