Major deals profiled include IPG’s acquisition of Acxiom Marketing Solutions, S4 Capital’s acquisition of MediaMonks and Accenture’s acquisition of Kogentix.
The Equiteq Knowledge Economy Share Price Index was broadly flat over the month.
IPG’s acquisition of Acxiom Marketing Solutions gives it access to anonymized customer data to enhance its targeted marketing solutions
Target: Acxiom Marketing Solutions (AMS) is Acxiom’s legacy data management business. It consists of a team of 2,100 people and represents about three quarters of Acxiom’s total revenue.
Buyer: Interpublic Group (IPG) is one of the leading networks of advertising agencies.
Deal Value: $2.3bn
Deal Insight: At the beginning of July, the Wall Street Journal reported that Dentsu and IPG were both expected to submit offers to acquire part of Acxiom. IPG followed with its announced acquisition of AMS, which gave it access to customer data that can drive more targeted marketing campaigns for its clients. The deal comes as the leading marketing agencies are coming under pressure from major consultancies and technology firms entering the digital media space. These more recent entrants are utilizing strong data analytics solutions to build effective advertising campaigns.
Data ethics has become an important issue with the adoption of GDPR in Europe and the controversies surrounding Facebook and Cambridge Analytica. Acxiom is considered to have a strong reputation in data integrity, which will have supported the strategic nature of this deal and premium valuation metrics. AMS was part of Acxiom’s Marketing Services and Audience Solutions segments, which generated total revenue of $706m in the year to March 2018.
Strong rise in average deal size and valuation multiples in H1 2018
The number of completed deals fell 5% on H1 2017
Activity remains focused on IT services and management consulting
Equiteq Knowledge Economy Share Price Index continues to reach new highs
Across the global knowledge economy in the first half of the year, average M&A deal sizes and valuation multiples rose markedly, but the number of completed deals fell. Many buyers pushed ahead with a smaller number of larger transformational deals for their businesses at premium prices in the current low interest rate environment. This is against a backdrop of rising signs that quantitative easing programs are coming to an end across developed economies.
The following trends are discussed in more detail in our recent mid-year M&A update report.
Dartmouth Partners received investment from Literacy Capital
The NAV People management buy-out by FPE Capital
c3/consulting sold to Ankura
Business Integration Partners (Bip) received majority investment from Apax Partners
Equiteq has had a very busy start to 2018 across our global business and this positive momentum is carrying into the summer. As I arrive back in New York from a series of meetings with our regional business leads in Europe and Asia, it is clear that activity in our sector remains robust and acquisition remains a critical component of the growth strategy for industry players. Recent data from Thomson Reuters indicates that global M&A across industries hit record levels in the first half of the year driven by a strong global economic outlook and record levels of capital available for deals.
We have completed transactions for a range of clients operating in the disruption zone of the rapidly transforming knowledge economy. We are also excited to commence work with a range of new clients that consider the current market conditions to be optimal for commencing an exit of their knowledge-intensive services business. In this blog we highlight our recent transaction advisory work which resulted in successful sale outcomes for our clients.
Major deals profiled include Ankura’s acquisition of Navigant Consulting’s DFLT and TAS businesses, Warburg Pincus’ acquisition of Capita’s Supplier Assessment Services business and Capgemini’s acquisition of Adaptive Lab.
Equiteq advised The NAV People on its sale to FPE Capital and Dartmouth Partners on its investment from Literacy Capital.
The Equiteq Knowledge Economy Share Price Index declined over the month led by falls in the share prices of listed management consulting players.
Madison Dearborn-backed Ankura acquires significant chunk of Navigant Consulting
Target: Navigant Consulting’s global business segments offering Disputes, Forensics and Legal Technology (DFLT) and Transaction Advisory Services (TAS). Navigant is a listed global management consulting firm.
Buyer: Ankura Consulting Group is a US-based business advisory and expert services firm that is backed by private equity firm Madison Dearborn Partners.
Deal Value: $470m (1.5x FY18 revenue)
Deal Insight:Ankura received $100m of development capital from Madison Dearborn Partners in March 2016. Since this investment, Ankura has grown rapidly, announcing four acquisitions prior to this transaction with Navigant. Earlier this year, Ankura notably acquired management consulting firm c3/consulting, which expanded its strategy and operational consulting capabilities across the United States. Its acquisition of Navigant’s DFLT and TAS businesses is Ankura’s largest deal to date and is a significant opportunity to establish its global footprint.
The divestitures to Ankura focuses Navigant’s operations on management consulting and managed services across high-growth industry verticals, including energy, financial services, and healthcare. Navigant realizes c.$370m in net proceeds after tax and transaction-related expenses. Some of these proceeds will be allocated to organic growth and strategic M&A opportunities, which are likely to be focused on building Navigant’s digital solutions.
Major deals profiled include OMERS Private Equity’s acquisition of Alexander Mann Solutions, H.I.G. Capital’s acquisition of Conduent’s US-based HR consulting business and Bain & Co.’s acquisition of FRWD.
The Equiteq Knowledge Economy Share Price Index achieved another month of robust gains.
OMERS Private Equity acquires Alexander Mann Solutions, marking the recruiting firm’s fourth private equity buyout
Target: Alexander Mann Solutions is a UK-based provider of workforce solutions meeting its clients’ permanent, contingent and internal mobility requirements through a range of outsourcing and consulting services. Much of its work revolves around helping large businesses to recruit and retain talent.
Buyer: OMERS Private Equity is the private equity arm of OMERS, Canada’s largest defined pension plan.
Deal Value: £820m ($1.1bn)
Deal Insight:The deal marks yet another private equity investment for Alexander Mann Solutions:
In 2013 it was acquired by New Mountain Capital through a c.$418m LBO.
In 2007 it was acquired by Graphite Capital through a $205m LBO.
In 1999 it was acquired by Advent International through a $56m LBO.
Through its string of investments, the business has grown into a global recruiting player with 4,000 talent acquisition and management experts that partner with over 100 clients across 85 countries. The investment from OMERS is expected to enable Alexander Mann to strengthen its sector and regional capabilities, while investing in technology that enhances its offering.
Major dealsprofiled include Infosys’ acquisition of WONGDOODY, HPE’s acquisition of RedPixie and Wavestone’s acquisition of Xceed.
The Equiteq Knowledge Economy Share Price Indexachieved robust rises over the period.
Infosys deepens its creative agency skills with WONGDOODY
Target: WONGDOODY is a US-based creative agency with studios in Seattle and Los Angeles providing strategy, research, brand and marketing positioning, creative design, advertising and production services across industries.
Buyer:Infosys is a global listed technology services player headquartered in India.
Deal Value: $75.0m
Deal Insight:This transaction exemplifies two important market trends. Firstly, it demonstrates the convergence of creative media with technology and consulting, as large technology players look to broaden their customer-focused advisory skills and take a larger share of the growing digital transformation consulting market. The deal also highlights the demand from the Indian outsourcers for US-based high-margin capabilities that enable them to build skills further up the consulting value chain.
The deal develops Infosys’ global connected network of Digital Studios to help clients respond to digital disruption of their industries. WONGDOODY builds on Infosys’ acquisition of UK-based product design and customer experience innovator Brilliant Basics, which was acquired last year for c.$9.7m.
2017 was a year of continued growth for Equiteq and further disruption of business models, which is transforming the industry that we have been tracking for 15 years. The disruption of the traditional consulting model from technology-enabled innovation, combined with economic trends, has led us to transition the definition of our industry coverage from consulting to the broader transforming knowledge economy. Our Global Knowledge Economy M&A report delivers you with actionable intelligence into the latest M&A and equity market trends across the knowledge economy, along with tips on how to consider these findings in the context of growing and selling your consulting or technology firm.
Major dealsincluded Apax’ acquisition of Business Integration Partners (Bip), Duff & Phelps’ acquisition of Kroll, Accenture’s acquisition of MXM (Meredith Xcelerated Marketing) and the completion of Altran’s acquisition of Aricent.
Equiteq advisedBip on its sale to Apax, c3 consulting on its sale to Ankura and 8works on its sale to Oliver Wyman.
The Equiteq Knowledge Economy Share Price Indexdipped slightly over the period.
By Pierre Briand, Managing Director, Equiteq Australia and New Zealand
This year’s Financial ReviewClient Choice Awardsproved that the Australian and New Zealand professional services sector is going from strength to strength. At a glittering award ceremony held in Melbourne last night, professional services firms and practitioners were rewarded for the excellent quality and service they provide to their clients.