Tech-Enabled Services Monthly August 2016

Tech-Enabled Services Monthly
August 2016
Tech-Enabled Services Headline Transactions
Target
Acquirer
• Premier Farnell (LSE: PFL) is a service-focused distributor of technology products and solutions offering
design, maintenance and repair services
VAR
• Avnet (NYSE: AVT) is acquiring Premier Farnell for $1.2b to strengthen its digital footprint which will be
enhanced by Premier's innovative online services spanning the entire product development lifecycle
• Epiq Systems (NSDQ: EPIQ) provides professional services and integrated technology solutions for the legal
industry
IT Services
• DTI (backed by OMERS Private Equity) is acquiring Epiq for $1.0b to create one of the largest global legal
process outsourcing companies, with significant scale and a broad portfolio of service offerings
• U.K.-based Ardenta provides IT infrastructure services, specializing in the management of e-commerce
Managed
systems, with a specific expertise in high-volume transactional database management
Services
• Claranet (backed by ABRY Partners) is acquiring Ardenta to grow its application management capabilities
and expand the portfolio of integrated IT solutions it offers to customers
• INSYS Group provides advanced predictive analytics, business intelligence, data warehousing, digital
marketing and enterprise information management services
IT Services
• Switzerland-based Luxoft (NYSE: LXFT) is acquiring INSYS for $71.4m to diversify its client base and
geographical footprint, and strengthen its big data and cloud capabilities
• Minacs provides business and technology outsourcing services with advanced capabilities in high-demand
a business line of
IT Services
services (e.g., internet of things (IoT), marketing optimization, etc.)
• SYNNEX (NYSE: SNX) is acquiring Minacs for $420.0m, with the intent to combine Minacs and its Concentrix
business segment, bolstering its ability to deliver these highly-demanded services
Enterprise Value / LTM Revenue
3.5x
3.0x
3.0x
18.0x
3.0x
1.9x
2.0x
12.0x
2.0x
14.6x
7.3x
0.2x
0.2x
Offshore ITS
Hosting
Services
IT Staffing
Transaction Info Services
Processing
VAR
4.0x
2.0x
0.0
ITS
7.7%
6%
4%
7.5%
IT Staffing
40%
0.9%
30%
0%
(2%)
(1.3%)
(4%)
IT Staffing
20%
Transaction
Processing
Info Services
VAR
0%
60%
50.9%
50%
42.9%
30.1%
32.8%
34.8%
40%
23.2%
12.3%
26.7%
30%
18.8%
16.0%
20%
8.8%
3.6%
10%
(4.2%)
Hosting
Services
VAR
70%
50%
Offshore ITS
Transaction Info Services
Processing
58.6%
60%
4.0%
ITS
Hosting
Services
1. Headline Transactions
70%
5.9%
2%
(6%)
Offshore ITS
LTM Gross & EBITDA Margins
LTM Revenue Growth
8%
7.2x
6.7x
6.0x
0.5x
10%
11.1x
8.0x
1.1x
ITS
10.8x
10.0x
1.0x
0.0
16.3x
16.0x
14.0x
2.5x
1.5x
Enterprise Value / LTM EBITDA
3.4%
ITS
Offshore ITS
Hosting
Services
IT Staffing
Transaction
Processing
Info Services
VAR
10%
0%
Note: EBITDA Margins in red
TEV / EBITDA Multiples Over Time
TEV / EBITDA
19.0x
17.0x
16.3x
15.0x
14.6x
13.0x
11.1x
11.0x
10.8x
9.0x
7.3x
7.0x
7.2x
5.0x
6.7x
3.0x
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Jul 2016
Transaction Processing
Info Services
Offshore ITS
ITS
Hosting Services
VAR
IT Staffing
Select Tech-Enabled Services Transactions Announced in July 2016
Enterprise
Value
Annc. Date
Sector
Acquirer
Target
Description
07/28/16
Managed
Services
Cal Net
Technology
Group, Inc.
inhouseIT, Inc.
California-based inhouseIT is a ShoreTel and
Office 365 partner, providing IT consulting and
managed services
NA
The acquisition is Cal Net's third in the past two years
and further solifies its presence on the West Coast as
one of the largest independent managed services
providers for small to mid-sized businesses
07/27/16
IT Services
Belcan
Corporation
Intercom Federal
Systems
Corporation
Intercom provides secure, enterprise-level IT
solutions that support and protect technology
assets and operations for the federal
government
NA
The acquisition enhances the capabilities of Belcan's
Federal Services business segment, which provides
services to meet the increasing demand from
governments for cybersecurity related services
07/26/16
IT Services
West Monroe
Partners, LLC
Invoyent LLC
Invoyent works with many of the nation's
largest healthcare insurance companies to
plan, build, and run technology-enabled
business solutions
$9.0
The acquisition will add over 30 professionals with a
mix of business consulting and technical knowledge to
West Monroe's existing healthcare practice
07/26/16
IT Services
Huron
Consulting
Group Inc.
Healthcare
Healthcare
Services
Management
(HSM)
Services
provides healthcare information technology
Management, Inc. and project management consulting services
NA
The acquisition augments Huron's healthcare practice –
while Huron's consultants predominately work with
Epic Systems, HSM's consultants work with other
systems (e.g., Cerner, Meditech, Allscripts, etc.)
07/25/16
IT Services
Datavail
Corporation
Art of BI
Software, LLC
Art of BI Software is an enterprise software
development and systems integration services
company
NA
The acquisition deepens Datavail's Oracle offering in
the BI and analytics space, adding software solutions
and integration services that extend the functionality of
OBIEE and Hyperion
07/20/16
IT Services
PCB Apps LLC
Capscient
Corporation
Capscient Corporation is a JD Edwards
consultancy and systems integration firm
NA
The acquisition extends PCB's geographic footprint and
enhances the Company's ability to provide customers
with an end-to-end enterprise service offering with
resources in the U.S. and India
Notes:
Comments
USD in millions
Source: Capital IQ, Company SEC Filings, industry research and TM Capital estimates
TM Capital’s Tech-Enabled Services Contacts
Selected TM Capital Tech-Enabled Services Experience
3. TES Transactions
New York
641 Lexington Avenue
30th Floor
New York, NY 10022
Tel: 212.809.1360
Boston
201 Washington Street
32nd Floor
Boston, MA 02145
Tel: 617.259.2200
Bradford A. Adams
Jarrad S. Zalkin
Managing Director
617-259-2203
[email protected]
Managing Director
617-259-2207
[email protected]
Atlanta
3575 Piedmont Road NE
Suite 1010
Atlanta, GA 30305
Tel: 404.995.6230
www.tmcapital.com /technology