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

By Ramone Param, Director, Equiteq

  • 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.

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

By Ramone Param, Director, Equiteq

  • 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.

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

By Ramone Param, Director, Equiteq

  • 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.

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