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.

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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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The Knowledge Economy Global M&A Report 2019

By Ramone Param, Director, Equiteq

We have released a summary of our detailed review of knowledge economy M&A and investor trends for owners of consulting and technology businesses.

  • 2018 was a year of strong M&A activity within an industry undergoing unprecedented change.
  • Deal volumes, average transactions sizes and median revenue valuation metrics rose.
  • Deal structures were more competitive, as observed by a rise in the upfront cash component and a shortening of the earn-out period for the average deal.
  • The Equiteq Knowledge Economy Share Price Index declined with broader equity market indices, but ended the year well above long-term averages.
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March 2019: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Industry deals profiled include CGI’s offer to acquire Acando, Accenture’s purchase of Enterprise System Partners and Version 1’s acquisition of TE4B.
  • The Equiteq Knowledge Economy Share Price Index was broadly flat over the month.

CGI makes recommended offer to acquire Acando to strengthen its capabilities in Northern Europe.

Target: Acando is an IT and management consulting business headquartered in Sweden.

Buyer: CGI Group is a Canada-headquartered IT services and business consulting firm.

Deal size: $459m (1.5x TTM revenue)

Deal insight:CGI is a global technology services player with a strong model of organic growth and M&A. The buyer has made numerous acquisitions over recent years that have expanded its global consulting and technology capabilities. Its most recent offer to acquire Acando will deepen its presence in Northern Europe adding over 2,100 professionals across the region. The purchase will expand the buyer’s strategic consulting, system integration and digital innovation capabilities. The deal builds on CGI’s €98m acquisition of Affecto in 2017. Affecto is a data analytics business headquartered in Finland.

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

By Ramone Param, Director, Equiteq

  • Industry deals profiled include Orange’s acquisition of SecureData, Point B’s acquisition of Independence Consulting and Blackstone’s investment in Lionpoint Group.
  • The Equiteq Knowledge Economy Share Price Index experienced rises over the month.

Orange broadens its cyber security capabilities in the UK with its acquisition of SecureData

Target: SecureData is the largest independent cyber security provider in the UK with additional operations in South Africa.

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

Deal insight:
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.

Orange acquires strong capabilities in this growing industry, particularly within cyber-criminality, security research and penetration testing. The acquisition extends Orange Cyberdefense’s existing operations in France and Belgium into the UK and South Africa. The acquisition follows Orange Business Services’ purchase of data and digital services specialist Business & Decision. These deals form part of the buyer’s strategy to become a global player in digital transformation and a leader across data services.

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

By Ramone Param, Director, Equiteq

  • Major deals profiled include DXC’s acquisition of Luxoft, Bain Capital’s acquisition of Brillio and IBM’s reported acquisition of T-Systems’ mainframe service business.
  • Equiteq advised Orbium on its sale to Accenture and Cervello on its sale to A.T. Kearney.      
  • The Equiteq Knowledge Economy Share Price Index experienced rises along with broader market indices.

DXC’s transformational acquisition of Luxoft builds new digital capabilities and sector vertical expertise.

Target: Luxoft is a global provider of technology solutions, including software development services.

Buyer: DXC Technology is a US-headquartered global IT services firm.

Deal Value: $2bn (2.2x TTM Sep-18 revenue)

Deal Insight: 
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). Since its formation, DXC has been highly acquisitive and has announced notable deals across technology and consulting, including the acquisitions of:

  • Tribridge and Logicalis SMC in 2017; and
  • System Partners, Molina Medicaid Solutions and argodesign in 2018.

DXC’s acquisition of Luxoft is a transformational deal for the firm. It provides DXC with important capabilities in outsourced digital engineering, cloud and devops. It also enables DXC to deepen its capabilities for clients in the automotive and financial services sector verticals, particularly in Europe. At the end of January, DXC also announced its acquisition of EG A/S, a Microsoft consulting firm with a strong presence across the Nordics.

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Data Analytics Consulting Global M&A Review 2019

By Ramone Param, Director, Equiteq

We have released a summary of our detailed review of data analytics consulting M&A and investor trends for owners of businesses across the knowledge economy.

At the core of the Fourth Industrial Revolution is the fusion of big data, advanced analytics and new physical technologies. The key to business success in the new digital age is no longer being able to simply use data to measure current and past performance. It is being able to make predictions about the future and quickly prescribe recommended strategies that can enrich decision making.

From a delivery model perspective, there is pressure on knowledge-intensive services firms to enhance their consulting offering with new data analytics solutions. This same pressure is being felt by consulting firms’ clients, who look to their advisers for assistance in innovating and realizing competitive advantages from new data analytics tools. Across the space in 2018, we found that buyers focused on acquisition targets with proprietary platforms, leverageable IP and managed services solutions.

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

By Ramone Param, Director, Equiteq

  • Major deals profiled include Cognizant’s acquisition of Softvision, NTT Data’s acquisition of Sierra Systems and Accenture’s acquisition of TargetST8.
  • Equiteq advised Copperman on its sale to Decision Inc. and Essential Design on its sale to PA Consulting.
  • The Equiteq Knowledge Economy Share Price Index fell over the month, along with other broader market indices.

Cognizant announces transformational acquisition of Softvision from Tower Arch Capital

Target: Softvision is a global provider of end-to-end digital products and solutions that works with a variety of blue-chip companies. The business has a network of 2,850 professionals with a significant presence in Romania.

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

Deal Value: $550m

Deal Insight:  The deal expands Cognizant’s offerings in digital and cloud services to better position it against more acquisitive digital competitors like Accenture. Cognizant will benefit from Softvision’s strong roster of client relationships and experience on high-profile projects. This includes the creation of a disruptive video-streaming platform and an iPad application for US-based healthcare provider Kaiser Permanente. The acquisition also expands Cognizant’s footprint in Romania. Softvision was previously owned by private equity Tower Arch Capital, which acquired the business in July 2015 for an undisclosed sum.

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Q3 2018 Knowledge Economy Global M&A Update

Global deal values and valuation multiples continue to rise led by media agencies and IT services M&A

By Ramone Param, Director, Equiteq

  • The number of completed deals rose 12%
  • Median deal sizes nearly doubled vs. Q3 2017
  • Activity remains focused on media agencies and IT services
  • Strong rises in M&A in North America and APAC
  • Equiteq Knowledge Economy Share Price Index pushes to new highs

The global M&A market across the knowledge economy was strong in the third quarter of 2018. Market data from the quarter reflects a key trend we have been monitoring over the last eighteen months: global buyers are pushing ahead with larger deals at premium prices. This is partly down to strategic buyers and private equity having record capital available for M&A. Given the low interest rate environment, there is pressure to deploy this capital on larger transactions. Particularly amid increasing signs that quantitative easing programs are coming to an end across developed economies.

The following summarizes the main trends discussed in more detail in our recent Q3 2018 M&A update report.

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