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.
Industry deals profiled include Orange’s
acquisition of SecureData, Point B’s acquisition of Independence Consulting and
Blackstone’s investment in Lionpoint Group.
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
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.
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.
acquisition of Luxoft builds new digital capabilities and sector vertical
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
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.
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.
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.
Major deals profiled include Cognizant’s acquisition of ATG, AlixPartners’ acquisition of Zolfo Cooper’s US operations and SAIC’s acquisition of Engility.
Equiteq advised System Partners on its sale to DXC Technology and Mexia on joining Deloitte.
The Equiteq Knowledge Economy Share Price Index fell modestly over the month.
Cognizant acquires ATG, expanding its capabilities in the rapidly growing cloud-based Quote to Cash consulting space
Target: Advanced Technology Group (ATG) is a US-based provider of advice on planning, implementing, and optimizing cloud-based Quote to Cash (QTC) business processes and technologies for businesses. ATG is a global Salesforce consulting partner.
Buyer: Cognizant is a US-headquartered global technology services firm.
Deal Insight: Equiteq recently published a guide for the Configure Price Quote (CPQ) industry at Salesforce’s Dreamforce 18. CPQ forms part of the QTC space and it was clear from our research that the space is seeing rapid growth, particularly as it relates to cloud-based solutions that are transforming the sales experience for businesses across industries. The following software players are some of the leaders that have received considerable investments and / or expanded into the space via M&A.
Apttus was acquired by private equity Thoma Bravo in September 2018;
SAP completed its acquisition of Callidus Software in April 2018;
Salesforce completed its acquisition of SteelBrick in 2016; and
Oracle completed its acquisition of BigMachines in 2013.
The acquisition of ATG marks Cognizant’s fourth acquisition in 2018. The deal is its second acquisition in the Salesforce consulting space after its recent acquisition of SaaSfocus – an Indian digital transformation consulting business that leverages Salesforce solutions. Salesforce consulting businesses continue to observe strong demand from buyers, as the industry benefits from the growth in the adoption of the latest Salesforce solutions.
I recently listened to Sunil Gupta’s HBR IdeaCast on digital strategy – a topic relevant to many, if not all, of our clients. After providing examples of failed approaches to digital strategy he rightfully points out that in order to be successful, strategies need to incorporate four components:
Operations and value chain
I think this is an incredibly helpful and balanced perspective. When advising companies in the knowledge economy and looking at the M&A focus of the large players, we see far too much focus on a single component, specifically customer engagement. There are perhaps a number of reasons for this, for example you can see immediate success, outcomes are more tangible, etc.
However, where we see organizations making significant strides is when they take a far more comprehensive approach to their digital strategy and look beyond the digital experience of the customer as their sole focus.