Sectorwatch: Management Consulting · 19Jul19 W Group INC. Wavestone SA 30.50 26.10 1.2x - 28Jun19...

Sectorwatch:Management ConsultingApril 2020

2

Management ConsultingApril 2020

Sector Dashboard [4]

Public Basket Performance [5]

Operational Metrics [7]

Valuation Comparison [10]

Recent Deals [13]

Appendix [15]

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with averbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document wasbelieved to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations asto the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Pleasenotify 7 Mile Advisors if it was distributed in error.

3

Overview

7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.

Dashboard• Summary metrics on the sector• Commentary on market momentum by

comparing the most recent 12-month performance against the last 3-year averages.

Public Basket Performance• Summary valuation and operating metrics

for a basket of comparable public companies

Valuation Comparison• Graphical, detailed comparison of

valuation multiples for the public basket

Recent Deals• The most recently announced deals in the

sector

4

Dashboard

Operating Metrics

Valuation

Revenue Growth Momentum

2.6% 1 - year revenue growth compared to revenue growth

average for last 3 years

Pricing / Gross Margin Momentum

0.3% 1 - year gross profit % compared to gross profit %

average for last 3 years

Profitability

-1.1% 1 - year EBITDA % compared to EBITDA % average for

last 3 years

Current revenue growth rate exceeds the average of the last 3 years by this

amount, indicating that market momentum is increasing

Current gross profit margin exceeds the average of the last 3 years gross profit

margin by this amount, indicating supplier pricing power

Current EBITDA margin is less than the average of the last 3 years EBITDA

margins, which may signal further consolidation

10.3%

11.2%

34.3%

0% 10% 20% 30% 40%

Median LTM Rev. Growth %

Median LTM EBITDA Margin %

Median LTM GP Margin %

1.6x

12.1x

16.2x

22.9x

0x 10x 20x 30x

Median TEV / LTM Revenue

Median TEV / LTM EBITDA

Median TEV / LTM EBIT

Median Price / LTM Earnings

5

Public Basket

Company TEV $mLTM

Rev $m

Rev Growth

YoY GP %EBITDA

%TEV / Rev X

TEV / EBITDA

X # FTEsRev / FTE $k

The Hackett Group, Inc. 414 261 -1% 37% 15% 1.6 9.7 1,143 228

CRA International, Inc. 426 451 8% 30% 10% 0.9 6.7 779 579

Huron Consulting Group Inc. 1,350 877 10% 34% 11% 1.5 12.1 3,750 234

ICF International, Inc. 1,596 1,479 11% 36% 9% 1.1 9.4 7,000 211

FTI Consulting, Inc. 4,996 2,353 16% 35% 15% 2.1 12.4 5,567 423

Booz Allen Hamilton Holding Corporation

12,379 7,274 11% 24% 10% 1.7 15.5 26,100 279

Accenture plc 110,189 44,656 6% 31% 16% 2.5 14.4 492,000 91

Average 18,764 8,193 9% 32% 12% 1.6 11.5 76,620 292

Median 1,596 1,479 10% 34% 11% 1.6 12.1 5,567 234

share price as of 24Apr20

6

Public Basket Valuation Trends

Public EBITDA Multiples over Time

Public Revenue Multiples over Time

0.0x

0.5x

1.0x

1.5x

2.0x

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20

TEV/Revenue - Median TEV/Revenue - Average

0x

5x

10x

15x

20x

Jun-1

5

Sep-15

Dec-1

5

Mar-

16

Jun-1

6

Sep-16

Dec-1

6

Mar-

17

Jun-1

7

Sep-17

Dec-1

7

Mar-

18

Jun-1

8

Sep-18

Dec-1

8

Mar-

19

Jun-1

9

Sep-19

Dec-1

9

Mar-

20

TEV/EBITDA - Median TEV/EBITDA - Average

11.8x

1.3x

0x

5x

10x

15x

20x

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20

TEV/EBITDA - Median TEV/Revenue - Median

TEV/EBITDA - Average TEV/Revenue - Average

7

Operational Metrics

LTM Gross Profit Margin % LTM EBITDA %

- 5% 10% 15% 20%

Median

ICF International, Inc.

CRA International, Inc.

Booz Allen Hamilton Holding

Corporation

Huron Consulting Group Inc.

FTI Consulting, Inc.

The Hackett Group, Inc.

Accenture plc

- 10% 20% 30% 40%

Median


Corporation


Accenture plc





8

Operational Metrics

LTM Revenue Growth %LTM Revenue per

Full Time Employee x 000’s

(5%) - 5% 10% 15%

Median


Accenture plc





Corporation


$- $200 $400 $600 $800

Median

Accenture plc



Huron Consulting Group

Inc.


Corporation



9

Operational Metrics

Accounts Receivable TurnoverAverage Days

Sales Outstanding

0x 1x 2x 3x 4x 5x 6x

Median







Corporation

Accenture plc

0x 20x 40x 60x 80x 100x120x

Median

Accenture plc


Corporation






10

Valuation

TEV / LTM Revenue TEV / LTM EBITDA

0x 1x 2x 3x

Median

CRA International,

Inc.


Huron Consulting

Group Inc.

The Hackett Group,

Inc.

Booz Allen Hamilton

Holding Corporation


Accenture plc

0x 4x 8x 12x 16x 20x

Median






Accenture plc


Corporation

11

Valuation

TEV / LTM EBIT Price / LTM Earnings

0x 10x 20x 30x

Median





Accenture plc


Corporation


0x 5x 10x 15x 20x 25x 30x

Median




Accenture plc



Corporation


12

Valuation

Historical Valuation Multiples versus Gross Profit

Historical Valuation Multiples versus Revenue Growth Rate

7x 9x 10x 12x 12x 14x 16x

30.3%

35.5%

37.4%

34.3%

34.8% 31.3%

23.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0x

2x

4x

6x

8x

10x

12x

14x

16x

18x

LTM

GP%

EBIT

DA(x

)

EBITDA(x) LTM GP%

7x 9x 10x 12x 12x 14x 16x

8.1%

10.5%

(1.4%)

10.3%

16.0%

5.7%

11.0%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0x

2x

4x

6x

8x

10x

12x

14x

16x

18x

LTM

RG

R%

EBIT

DA(x

)

EBITDA(x) LTM RGR%

13

Recent Transactions

Date Target Buyer / Investor

Total Transaction

Value Target

Revenue TEV /

Revenue TEV /

EBITDA

23Apr20 HumanCapient Consulting Sdn Bhd Sino Hua-An International Berhad 3.33 - - -

19Mar20 Strativa, Inc. Avasant LLC - - - -

12Mar20 Wuhan Huazi Enterprise Management Consulting Co., Ltd. Beijing Franshion Yicheng Properties Limited 974.59 - - -

11Mar20 Talavant, Inc. Baker Tilly Virchow Krause, LLP - 3.80 - -

3Mar20 Delphos International, Ltd. APQ Global Limited 3.50 3.70 0.9x -

19Feb20 Kalypso LP Rockwell Automation, Inc. - - - -

22Jan20 Duff & Phelps Corporation Stone Point Capital LLC; Further Global Capital Management, L.P.

4,200.00 - - -

20Dec19 Conway MacKenzie, Inc. Riveron Consulting, LP - - - -

18Dec19 Maven Wave Partners LLC Atos SE - - - -

18Dec19 Net eSolutions Corporation NTT DATA Services, LLC - - - -

17Dec19 Purple Square Management Partners B.V. Ctac N.V. - 5.58 - -

2Dec19 Apis Group Pty Ltd Accenture plc - - - -

11Nov19 Presence of IT, Inc. Workforce Insight, LLC - - - -

31Oct19 Bow & Arrow Limited Accenture Interactive - - - -

29Oct19 Shanghai Dingqun Enterprise Management Consulting Co., Ltd.

Sinopharm Holding GuoDa Drug Store Co., Ltd. 132.22 - - -

23Oct19 Revel Consulting, Inc. Infogain Corporation - - - -

2Oct19 Anthony Hodges Consulting Limited Arthur J. Gallagher & Co. - - - -

22Mar19 Hangzhou Yihui Business Consulting Co., Ltd. Shanghai Xuxiao Enterprise Management Co., Ltd. 53.40 - - -

18Sep19 Hangzhou Yihui Business Consulting Co., Ltd. Shanghai Xuxiao Enterprise Management Co., Ltd. 40.83 - - -

25Jul19 PowerData Solutions SL Devoteam SA - 2.19 - -

3Sep19 Westney Consulting Group, Inc. McKinsey & Company, Inc. - - - -

5Jun19 Torres Advanced Enterprise Solutions, LLC Bootstrap Capital, LLC - - - -

22Jul19 Frank & Company, p.c. Prager Metis CPAs, LLC - - - -

19Jul19 W Group INC. Wavestone SA 30.50 26.10 1.2x -

28Jun19 Changxing Lincheng Enterprise Management Consulting Co., Ltd.

Noblelift Intelligent Equipment Co.,Ltd. 53.73 - - -

26Jun19 Auriemma Consulting Group, Inc. CNL Strategic Capital, LLC 44.50 - - -

14

APPENDIX:

Public Basket

Constituents

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with averbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document wasbelieved to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations asto the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Pleasenotify 7 Mile Advisors if it was distributed in error.

Management ConsultingApril 2020

15

Public Basket


The Hackett Group, Inc. operates as a strategic advisoryand technology consulting firm primarily in North Americaand European countries. Its executive advisory programsinclude best practice intelligence center, an onlinesearchable repository of best practices, performancemetrics, conference presentations, and associated research;best practice accelerators that provide Web based access tobest practices, customized software configuration tools, andbest practice process flows; advisor inquiry, an inquiryservice used by clients for access to fact-based advice onproven approaches and methods; best practice research, aresearch that provides insights into the proven approaches;and peer interaction comprising member-led Webcasts,annual best practice conferences, annual member forums,membership performance surveys, and client-submittedcontent. The company’s benchmarking services conductstudies in the areas of selling, general and administrative,finance, human resources, information technology,procurement, enterprise performance management, sharedservice centers, and working capital management. Thecompany was founded in 1991 and is headquartered inMiami, Florida.

Date Key Development Headline5/7/19 The Hackett Group Intends To Seek Acquisitions

0x

1x

2x

3x

Revenue Multiples - The Hackett Group, Inc.

TEV/Revenue Average

0x

10x

20x

30x

EBITDA Multiples - The Hackett Group, Inc.

TEV/EBITDA Average

0x

20x

40x

60x

P/E Multiples - The Hackett Group, Inc.

P/E Average

16

Public Basket


CRA International, Inc., a consulting company, provideseconomic, financial, and management consulting services inthe United States, the United Kingdom, and internationally.The company advises clients on economic and financialmatters pertaining to litigation and regulatory proceedings;and guides corporations through critical business strategyand performance-related issues. The company’s consultingservices include research and analysis, expert testimony,and support in litigation and regulatory proceedings in theareas of finance, accounting, economics, insurance, andforensic accounting and investigations to corporate clientsand attorneys. In addition, its management consultingservices comprise strategy development, performanceenhancement, corporate strategy and portfolio analysis,estimation of market demand, new product pricingstrategies, valuation of intellectual property and otherassets, assessment of competitors' actions, and analysis ofnew sources of supply. It serves various industries, includingagriculture; banking and capital markets; chemicals;communications and media; consumer products; energy;entertainment; financial services; health care; insurance;life sciences; manufacturing; metals, mining, and materials;oil and gas; real estate; retail; sports; telecommunications;transportation; and technology. CRA International, Inc. wasfounded in 1965 and is headquartered in Boston,Massachusetts.

0.0x

0.5x

1.0x

1.5x

2.0x

Revenue Multiples - CRA International, Inc.

TEV/Revenue Average

0x

4x

8x

12x

16x

20xEBITDA Multiples - CRA International, Inc.

TEV/EBITDA Average

0x

20x

40x

60x

80x

P/E Multiples - CRA International, Inc.

P/E Average

17

Public Basket


Huron Consulting Group Inc., a professional services firm,provides advisory, technology, and analytic solutions in theUnited States and internationally. Its Healthcare segmentprovides advisory services in the areas of strategy, caretransformation, financial and operational performance,technology and analytics, and leadership development tonational and regional hospitals, integrated health systems,academic medical centers, community hospitals, andmedical groups. Its Business Advisory segment providesenterprise performance management, enterprise resourceplanning, business intelligence and analytics, customerrelationship management, and data management services;and capital advisory, transaction advisory, operationalimprovement, restructuring and turnaround, valuation, anddispute advisory services. Huron Consulting Group Inc. wasfounded in 2002 and is headquartered in Chicago, Illinois.

Date Key Development Headline10/29/19 Huron Announces Partnership with Medically Home Group,

Inc

0x

1x

2x

3x

4xRevenue Multiples - Huron Consulting Group

Inc.

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - Huron Consulting Group

Inc.

TEV/EBITDA Average

0x

20x

40x

60x

80x

100x

P/E Multiples - Huron Consulting Group Inc.

P/E Average

18

Public Basket


ICF International Inc. provides management, marketing,technology, and policy consulting and implementationservices to government and commercial clients in the UnitedStates and internationally. It also identifies, defines, andimplements policies, plans, programs, and business toolsthrough a range of standard and customized methodologiesfor its clients; conducts survey research; collects andanalyzes various data to understand critical issues andoptions for its clients; and provides actionable businessintelligence, as well as information and data managementsolutions that allow integrated, and purpose-driven datausage. ICF International, Inc. was founded in 1969 and isheadquartered in Fairfax, Virginia.

Date Key Development Headline1/13/20 ICF International, Inc., Incentive Technology Group Llc -

M&A Call

2/26/19 ICF To Seek Acquisitions

0.0x

0.5x

1.0x

1.5x

2.0xRevenue Multiples - ICF International, Inc.

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - ICF International, Inc.

TEV/EBITDA Average

0x

10x

20x

30xP/E Multiples - ICF International, Inc.

P/E Average

19

Public Basket


FTI Consulting, Inc. provides business advisory services tomanage change, mitigate risk, and resolve disputesworldwide. The company’s Corporate Finance &Restructuring segment provides turnaround andrestructuring, business transformation, interimmanagement, valuation and financial advisory, transaction,dispute advisory, and tax services, as well as mergers andacquisitions (M&A), and M&A integration services. ItsForensic and Litigation Consulting segment offers anti-corruption investigations and compliance, and data andanalytics, as well as compliance, monitoring, andreceivership services; cybersecurity, forensic accounting andadvisory, and global risk and investigations practice; andconstruction solutions, dispute advisory, intellectualproperty, trial, business insurance claims, and healthsolutions. FTI Consulting, Inc. was founded in 1982 and isheadquartered in Washington, District of Columbia.

Date Key Development Headline8/7/19 FTI Consulting, Inc. (NYSE:FCN) completed the acquisition of

Andersch AG Wirtschaftsprüfungsgesellschaft.

6/27/19 FTI Consulting, Inc. (NYSE:FCN) entered into a definitive agreement to acquire Andersch AG Wirtschaftsprüfungsgesellschaft.

11/30/18 FTI Consulting May Seek Acquisitions

0x

1x

2x

3xRevenue Multiples - FTI Consulting, Inc.

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - FTI Consulting, Inc.

TEV/EBITDA Average

0x

20x

40x

60xP/E Multiples - FTI Consulting, Inc.

P/E Average

20

Public Basket

Booz Allen Hamilton Holding Corporation

Booz Allen Hamilton Holding Corporation providesmanagement and technology consulting, engineering,analytics, digital, mission operations, and cyber solutions togovernments, corporations, and not-for-profit organizationsin the United States and internationally. The company offersconsulting solutions for various domains, businessstrategies, human capital, and operations. It also providesanalytics services, which focuses on deliveringtransformational solutions in the areas of decision analytics,including operations research and cost estimation;automation; and data science, which include predictivemodeling and machine learning, as well as new or emergingareas, such as deep learning and artificial intelligence. BoozAllen Hamilton Holding Corporation was founded in 1914 andis headquartered in McLean, Virginia.

0x

1x

2x

3xRevenue Multiples - Booz Allen Hamilton

Holding Corporation

TEV/Revenue Average

0x

10x

20x

30xEBITDA Multiples - Booz Allen Hamilton

Holding Corporation

TEV/EBITDA Average

0x

10x

20x

30x

40xP/E Multiples - Booz Allen Hamilton Holding

Corporation

P/E Average

21

Public Basket

Accenture plc

Accenture plc provides consulting, technology, andoutsourcing services worldwide. Its Communications, Media& Technology segment provides professional services thathelp clients accelerate and deliver digital transformation, andenhance business results through industry-specific solutionsfor communications, media, and high tech industries, as wellas for software platforms. The company’s Financial Servicessegment offers services that address profitability pressures,industry consolidation, regulatory changes, and the need tocontinually adapt to new digital technologies. This segmentserves clients in banking, capital markets, and insuranceindustries. Accenture plc was founded in 1989 and is basedin Dublin, Ireland.

Date Key Development Headline4/19/20 Accenture plc (NYSE:ACN) agreed to acquire Gekko Mentions

légales.

4/14/20 Accenture plc (NYSE:ACN) entered into an agreement to acquire NIKE Group S.p.A.

4/6/20 Accenture plc (NYSE:ACN) acquired Revolutionary Security LLC.

4/1/20 Accenture plc (NYSE:ACN) acquired Yesler, Inc.

3/27/20 Accenture and the Digital Dollar Foundation Announce Partnership

0x

1x

2x

3x

4x

Revenue Multiples - Accenture plc

TEV/Revenue Average

0x

10x

20x

30xEBITDA Multiples - Accenture plc

TEV/EBITDA Average

0x

10x

20x

30x

40xP/E Multiples - Accenture plc

P/E Average

22

7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A andprivate capital transactions and provide market assessments and benchmarking. As a close-knit team with a long history together and a laserfocus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets.Securities offered through 7M Securities LLC.

Leroy Davis, Partner 704.899.5962 [email protected]

Tripp Davis, Partner 704.899.5762 [email protected]

Andy Johnston, Partner 704.899.5961 [email protected]

Mark Landry, Managing Director 561.972.0609 [email protected]

Ben Lunka, Managing Director 704.496.2995 [email protected]

John Cooper, Director 704.973.3996 [email protected]

Tim Frye, Director 704.973.3994 [email protected]

Kristina Sergueeva, Director 704.899.5149 [email protected]

Ben Garber, Vice President 412.626.7898 [email protected]

Nicholas Prendergast, Vice President 704.973.3995 [email protected]

Garth Martin, Vice President 704.973.3997 [email protected]

Ariail Barker, Director, Sales & Marketing 704.981.2908 [email protected]

Emily Halstenberg, Marketing & Sales Coordinator 704.409.9912 [email protected]

Marty Johnson, Senior Associate 704.973.3999 [email protected]

Sydney Scadden, Senior Associate 704.973.3998 [email protected]

Steve Buffington, Associate 704.960.1828 [email protected]

Dennis Fox, Associate 704.706.9168 [email protected]

Daniel Kim, Associate 704.912.4584 [email protected]

Olufunke Abass, Associate 704.285.8171 [email protected]

Robin Siegel, Analyst 704.490.4714 [email protected]

CONTACT INFO

Sectorwatch: Management Consulting · 19Jul19 W Group INC. Wavestone SA 30.50 26.10 1.2x - 28Jun19...

Documents

Transcript of Sectorwatch: Management Consulting · 19Jul19 W Group INC. Wavestone SA 30.50 26.10 1.2x - 28Jun19...