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.
The following summarizes our five key predictions for business owners in 2019 as discussed in our recently released Knowledge Economy Outlook paper.
1. Economic and political uncertainties will create opportunities for agile consulting companies to develop solutions that can help mitigate the current business risks facing their clients.
In 2018, the Equiteq Knowledge
Economy Share Price Index posted its biggest decline since 2008. This mirrored
weak performance across broader market indices. After a highly volatile end to
the year, we commence 2019 with increased equity market uncertainty led by a
range of political and economic risks. Against this backdrop, consulting
business owners will need to be aware of the opportunities to position their
organizations appropriately in 2019.
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.
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.
Major deals profiled include Wunderman’s acquisition of Gorilla Group, Omnicom’s acquisition of Credera and Accenture’s acquisitions of Mindtribe & Pillar.
Equiteq advised DBM Consultants on its merger with Illuminera.
The Equiteq Knowledge Economy Share Price Index rose over the month led by share price rises in various listed management consulting and IT services.
Wunderman acquires Gorilla and WPP announces Mark Read as its new CEO
Target: Gorilla Group is a 370-person global digital agency specializing in eCommerce consulting. In FY2017 the agency generated $40m of revenue.
Buyer: Wunderman is a digital agency that is part of WPP, one of the leading global networks of advertising agencies.
Deal Insight: Gorilla Group will become part of Wunderman Commerce. The acquisition deepens Wunderman Commerce’s eCommerce capabilities in North America. The buyer will also benefit from Gorilla’s strong relationships with key technology partners including SAP Hybris, Salesforce and Magento.
At the end of the month, it was announced in the Financial Times that Mark Read will be named as the new CEO of WPP, succeeding Sir Martin Sorrell. There was a lot of speculation on internal and external candidates that may be chosen as WPP’s new leader. Mark Read had previously held leadership positions at WPP Digital and Wunderman respectively. Read is expected to undertake a strategic review of the business as it faces a range of fresh challenges.
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.
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.