Major deals profiled include NTT Data Services’ acquisition of Flux7, Accenture’s purchase of Clarity Insights and Atos’ acquisition of Maven Wave.
The Equiteq Knowledge Economy Share Price Index rose over the month.
NTT Data Services acquires Flux7, bolstering its
AWS consulting capabilities.
Target: Flux7 is a US-headquartered
company specialized in cloud implementation and migration, automation and
DevOps consulting services.
Buyer: NTT Data Services is a US-headquartered provider
of IT insights and solutions.
Deal insight: The acquisition of Flux7 forms part of three acquisitions announced by NTT Data Services in 2019. The buyer is bolstering its IT consulting capabilities across North America and the purchase of Flux7 adds consulting capabilities in the rapidly growing AWS’ public cloud. The deal also strengthens NTT Data Services’ capabilities in application modernization, a space in which it was named a leader in the Q3 2019 Forrester Wave for Application Modernization and Migration Services.
In April, Flux7 raised funding from NewWave Partners to invest in the expansion of its DevOps consulting services. Its acquisition by NTT Data Services will give Flux7 access to NTT’s global R&D capabilities and infrastructure. The deal will also enable Flux7 to offer its clients a broader set of digital transformation and innovation capabilities from an established global platform.
We are pleased to present the findings of our sixth annual survey
of global strategic buyers and private equity investors acquiring businesses
across the knowledge economy.
propensity for larger deals, driven by expectations of robust levels of capital
being available for M&A, particularly for private equity investors
M&A market is maintaining upward pressure on pricing and deal structures
A major driver
of M&A is digital transformation, while buyers are also monitoring the
potential headwinds from economic and political instability
Pricing and deal structures are dependent upon an assessment of
a variety of quantitative and qualitative metrics discussed in the report
Each year we commission a comprehensive independent survey of
the knowledge economy to deliver actionable M&A intelligence for business
owners. This Knowledge Economy Global Buyers Report analyzes the findings of
this survey and provides unique insights into current trends among strategic
buyers and private equity investors that acquire knowledge-intensive businesses.
Deal insight: Thoma Bravo will be acquiring a cyber security provider that has positioned itself as an innovator in the market by leveraging advanced capabilities in artificial intelligence, cloud, data analytics and managed threat response. The global cybersecurity market is expected to grow rapidly over the coming years. Accelerating digital transformation of businesses across industries has opened new vulnerabilities with the continued shift to new cloud-based systems, as well as the rising adoption of mobile devices, social media platforms and advanced data analytics tools. In addition to these industry drivers, robust capital raises and dry powder are supporting strong demand from private equity firms bidding on the potential for stellar returns in the space.
Thoma Bravo is an
investor that has experience of investing in major assets in the cyber security
space. The private equity buyer previously acquired Imperva, a provider of
cybersecurity solutions to protect systems on-premise and in the cloud, in a
deal which was valued at $2.1bn. The investment firm also acquired Veracode, a
provider of next-generation application security testing, which was purchased
from Broadcom for $950m. We have also noted major recent cyber security deals
from Thoma Bravo’s competitors including Blackstone and KKR, who exited their
investment in Cylance to BlackBerry last year.
Sophos is listed on
the London Stock Exchange and Thoma Bravo’s proposed offer price of $7.40 pence
per share in cash represents a 37.1% premium to the closing price of Sophos
shares on 11 October 2019. The acquisition of Sophos is being denominated in
dollars against a backdrop of continued forex volatility in the UK through Brexit
negotiations. This presents significant foreign exchange risks to investors that
are being paid in sterling.
Major deals profiled include McKinsey’s acquisition of Westney Consulting, Accenture’s purchase of Pragsis Bidoop and Siemens Healthineers’ acquisition of ECG Management Consultants.
Equiteq advised Live Rice Index on its sale to S&P Global Platts.
The Equiteq Knowledge Economy Share Price Index was broadly flat over the month.
McKinsey strengthens its capital-projects
consulting capabilities with acquisition of Westney Consulting.
Buyer: McKinsey is a US-headquartered global management consulting firm serving businesses, governments, and institutions.
Target: Westney Consulting is a US-headquartered capital projects consulting firm.
Deal insight: The acquisition of Westney further strengthens McKinsey’s
industry recognized capital projects and infrastructure consulting business.
Westney has strong capabilities in energy consulting, enabled by rich data
sets. These capabilities have benefited from stabilizing commodity prices,
increased infrastructure spend in the US and the rising complexity of new large
McKinsey has historically focused on organic
growth, while making selective acquisitions in strategically important spaces.
Strategic sectors have included digital consulting and data analytics, which
are also market segments with acute talent shortages. McKinsey’s acquisitions
are typically preceded by a partnership with a target company, which can enable
the testing of synergies before agreeing a deal. McKinsey and Westney note a
longstanding partnership, where they have worked together on various projects
for over 10 years prior to agreeing this transaction.
Major deals profiled include Guidehouse’s
acquisition of Navigant Consulting, BC Partners’ purchase of Presidio and Accenture’s
acquisition of Parker Fitzgerald.
The Equiteq Knowledge Economy Share
Price Index declined
over the month in line with broader equity markets.
Capital-backed Guidehouse acquires Navigant Consulting in a landmark management
Navigant Consulting is
a US-headquartered global
professional services firm that was listed on the NYSE.
Guidehouse is a US-headquartered provider of management
consulting services to government clients. Guidehouse formed following Veritas Capital’s
acquisition of PwC’s public sector advisory business last year.
(1.4x TTM Jun-2019 revenue)
acquisition of Navigant will create a major management consulting player with
deep industry expertise. Guidehouse has worked on high-profile lucrative
engagements with government agencies such as the department of defense, homeland
security and veterans affairs. These government-focused advisory capabilities
will be merged with Navigant’s strengths in consulting to the healthcare,
energy and financial services sectors.
sale of PwC’s government consulting business to Veritas Capital was followed by
a rebranding of the business to “Guidehouse” last Summer. The divestiture is expected
to allow PwC to focus on the growth of other parts of its advisory business and
to enable it to pursue more business in auditing government agencies. This audit
business was being limited due to professional standards which cap consulting
services that audit firms can provide to these agencies.