February 2020: Knowledge Economy M&A and Equity Market Update

  • Major deals profiled include Stone Point Capital and Further Global Capital Management’s acquisition of Duff & Phelps, CGI Group’s purchase of Meti and ICF’s acquisition of Incentive Technology Group.
  • Equiteq advised The Shelby Group on its sale to WestView Capital Partners and Choice Financial Solutions on its sale to Raisin.
  • The Equiteq Knowledge Economy Share Price Index rose over the month.

Duff & Phelps receives fresh investment from Stone Point Capital and Further Global Capital Management.

Target: Duff & Phelps is a US-headquartered provider of valuation, corporate finance and regulatory consulting services.

Buyers: Stone Point Capital and Further Global Capital Management are US-headquartered providers of investment capital.

Deal value: $4.2bn

Deal insight: Duff & Phelps has received fresh capital from Stone Point Capital and Further Global Capital Management to enable the next phase of its growth. Duff & Phelps has c.3,500 professionals located throughout offices in the Americas, Europe and Asia. The firm’s longstanding client relationships include nearly 50% of the companies in the S&P 500, 65% of Fortune 1000 companies and 70% of top-tier private equity firms, law firms and hedge funds.

Permira continues to hold a significant stake in the business as part of the consortium. Permira had acquired Duff & Phelps from Carlyle at the end of 2017. The deal valued Duff & Phelps at $1.75bn, implying a c.2.5x valuation multiple on FY16 revenue. The acquisition marked Permira’s eighth investment in the financial services industry and netted Carlyle 2.4x its investment, according to a report from The Wall Street Journal. During the hold period, Permira was able to partially enable the growth of the business through organic initiatives and also through acquisitions including Kroll in 2018 and Prime Clerk in 2019.

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January 2020: Knowledge Economy M&A and Equity Market Update

  • 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.

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

  • 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.

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

  • 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 infrastructure projects.

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.

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

  • 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.

Veritas Capital-backed Guidehouse acquires Navigant Consulting in a landmark management consulting transaction.

Target: Navigant Consulting is a US-headquartered global professional services firm that was listed on the NYSE.

Buyer: 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.

Deal value: $1.1bn (1.4x TTM Jun-2019 revenue)

Deal insight: 

The 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.

The 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.

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

  • Major deals profiled include Bain Capital’s acquisition of Kantar, Tech Mahindra’s acquisition of Mad*Pow and PA Consulting’s purchase of 4iNNO.
  • Equiteq advised WGroup on its sale to Wavestone and RevUnit on its investment from Mountaingate Capital.
  • The Equiteq Knowledge Economy Share Price Index dipped slightly over the month.

WPP sells research and analytics business Kantar to Bain Capital.

Target: Kantar is a UK-headquartered research, data and insights business that was owned by global marketing network WPP.

Buyer: Bain Capital is a US-headquartered multi-asset alternative investment firm.

Deal value: $3.1bn (1.5x TTM Dec-2018 revenue)

Deal insight: In June, The Drum reported that WPP was in the process of selling Kantar. It was noted that Vista Equity Partners, Apollo, Platinum, as well as Bain, were four US private equity’s bidding for the research unit. The private equity focused process exemplifies a broader trend of strong demand for major knowledge-intensive services businesses from cash-rich financial buyers that are supported by robust fresh fundraisings. Kantar’s investment from Bain Capital follows the financial buyer’s acquisition of digital consulting firm Brillio in January.

WPP is undertaking a crucial transformation of its business following the resignation of Sir Martin Sorrell last year and Mark Read’s appointment as the marketing network’s new CEO. WPP recently sold its stake in Globant to pay down debt and announced internal mergers of agencies to create a more comprehensive digital-focused offerings for its clients. This is part of a three-year plan of “radical evolution” that was outlined by Read to improve WPP’s business performance. This is aimed at better positioning WPP for growth by countering new competition from innovative non-traditional media competitors from the consulting and technology sectors.

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

By Ramone Param, Director, Equiteq

Major deals profiled include Capgemini’s acquisition of Altran, Tieto’s acquisition of EVRY and CVC’s acquisition of Teneo.
The Equiteq Knowledge Economy Share Price Index rose over the month.

Capgemini and Altran create a global digital transformation leader with strong ER&D capabilities.

Target: Altran is a France-headquartered provider of engineering and R&D services.

Buyer: Capgemini is a France-headquartered global provider of consulting, IT services and digital transformation.

Deal value: €3.6bn (1.2x TTM Dec-2018 revenue)

Deal insight:
The purchase of Altran will enable Capgemini to take a leading position as a service provider focused on engineering, research and development (ER&D) as part of the digital transformation of industrial and tech companies. The acquisition is a milestone transaction for Capgemini that builds on previous deal flow in areas like digital media, cyber security and financial services consulting. This includes the purchase last year of digital consulting firm LiquidHub, which was acquired for €400m from ChrysCapital. The buyer followed this acquisition with the launch of Capgemini Invent, which combined Capgemini Consulting and expertise in technology and data science. The new brand comprised LiquidHub, innovation consulting firm Fahrenheit 212, as well as creative design agencies Idean, Adaptive Lab and Backelite. The acquisition of Altran, along with these recent acquisitions and restructurings, better positions Capgemini against growing digital transformation competitors like Accenture, Cognizant and the Indian IT services players.

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

By Ramone Param, Director, Equiteq

  • Industry deals profiled include Accenture’s acquisition of Droga5, S4 Capital’s acquisition of Caramel Pictures and ProgMedia, and Publicis’ purchase of Epsilon.
  • The Equiteq Knowledge Economy Share Price Index rose with broader equity market indices over the month.

Accenture’s purchase of Droga5 exemplifies the rapid transformation of the digital media competitive landscape

Target: Droga5 is a US-headquartered advertising agency with over 500 employees that has worked with a variety of blue-chip clients including Amazon and The New York Times.

Buyer: Accenture is an Ireland-headquartered global technology services firm.

Deal insight: Droga5 is the largest agency acquisition that Accenture has made to date. The deal further entrenches Accenture Interactive as a major player in the digital media space, putting pressure on the “Big Six” traditional media networks – WPP, Omnicom, Publicis, Havas, IPG and Dentsu. It will also put pressure on acquisitive growing consulting and technology firms that have already entered the space, including Capgemini, Cognizant and Deloitte Digital.

The deal forms part of another active year of deal flow for Accenture. Last year, Accenture Interactive was named the largest digital network worldwide by Advertising Age in its annual agency report for the third year running. Accenture Interactive’s major deals through 2018 included Adaptly in the US, Mackevision in Germany, Meredith Xcelerated Marketing (MXM) in the US, HO Communication in China and Altima in France.

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

By Ramone Param, Director, Equiteq

  • Major deals profiled include Cognizant’s acquisition of Mustache, PA Consulting’ acquisition of We Are Friday and Accenture’s acquisition of Knowledgent.
  • Equiteq advised LightStream Analytics on its sale to ABeam Consulting.
  • The Equiteq Knowledge Economy Share Price Index declined along with broader market indices.

Cognizant acquires creative agency Mustache after another strong year of deal flow for the prolific buyer.

Target: Mustache is a US-based content creation agency that provides video production and marketing services with a focus on developing integrated advertising campaigns for blue-chip clients.

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

Deal Insight: Cognizant stepped up its deal flow across digital capabilities following a lull in activity in 2015. In its debut appearance, Cognizant Interactive was named among the top of Ad Age’s Agency Report 2018 rankings. The acquisition of Mustache adds strong content specialist capabilities and develops Cognizant Interactive’s digital content services to better position it against competitors like Accenture Interactive and Deloitte Digital. The transaction builds on Cognizant’s acquisition of Softvision for $550m in October. Softvision is a provider of end-to-end digital products and solutions with experience in developing video-streaming platforms.

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

By Ramone Param, Director, Equiteq

  • Major deals profiled include Accenture’s acquisition of Intrigo, BDO’s acquisition of Moore Stephens LLP and Tata Consultancy Services’ acquisition of BridgePoint.
  • Equiteq advised OEE Consulting on its sale to Webhelp’s gobeyond.
  • The Equiteq Knowledge Economy Share Price Index experienced some volatility over the month along with broader market indices.

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