Sectorwatch: Salesforce Partners · Salesforce Partners April 2019. 2 Salesforce Partners April...

Sectorwatch:Salesforce PartnersApril 2019

2

Salesforce PartnersApril 2019

Sector Dashboard [4]

Public Basket Performance [5]

Operational Metrics [7]

Valuation Comparison [10]

Recent Deals [13]

Appendix [14]

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to bedelivered only in conjunction with a verbal 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 was believed to be accurate at the time of authorship and camefrom publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy orcompleteness of third-party data contained herein. This document should be treated as confidential and for the use of the intendedrecipient only. Please notify 7 Mile Advisors if it was distributed in error.

3

Overview

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

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

-0.02% 1 - year revenue growth compared to revenue growth

average for last 3 years

Pricing / Gross Margin Momentum

0.9% 1 - year gross profit % compared to gross profit %

average for last 3 years

Profitability

-0.2% 1 - year EBITDA % compared to EBITDA % average for

last 3 years

Current revenue growth rate is less than the average of the last 3 years,

indicating that the market may be flattening or declining

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

7.9%

20.8%

35.4%

0% 10% 20% 30% 40%

Median LTM Rev. Growth %

Median LTM EBITDA Margin %

Median LTM GP Margin %

2.5x

12.9x

14.9x

23.1x

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

Perficient, Inc. 1,003 498 3% 36% 12% 2.0 16.7 3,060 163

HCL Technologies Limited 21,333 8,393 10% 35% 23% 2.5 10.9 - NA

Capgemini SE 22,352 15,110 5% 27% 13% 1.5 11.7 211,313 72

Infosys Limited 41,692 11,799 8% 35% 25% 3.5 14.0 228,123 52

Cognizant Technology Solutions Corporation 38,958 16,125 9% 39% 21% 2.4 11.7 281,600 57

Accenture plc 109,890 40,840 8% 32% 16% 2.7 16.5 459,000 89

Tata Consultancy Services Limited 112,744 21,139 19% 45% 27% 5.3 19.8 - NA

International Business Machines Corporation 162,472 79,591 1% 46% 21% 2.0 9.7 350,600 227

Average 63,806 24,187 8% 37% 20% 2.8 13.9 191,712 110

Median 40,325 15,617 8% 35% 21% 2.5 12.9 219,718 80

share price as of 15Apr19

6

Public Basket Valuation Trends

Public EBITDA Multiples over Time

Public Revenue Multiples over Time

0x

1x

2x

3x

4x

Jul-

14

Oct-

14

Jan-1

5

Apr-

15

Jul-

15

Oct-

15

Jan-1

6

Apr-

16

Jul-

16

Oct-

16

Jan-1

7

Apr-

17

Jul-

17

Oct-

17

Jan-1

8

Apr-

18

Jul-

18

Oct-

18

Jan-1

9

Apr-

19

TEV/Revenue - Median TEV/Revenue - Average

0x

5x

10x

15x

20x

Jul-

14

Oct-

14

Jan-1

5

Apr-

15

Jul-

15

Oct-

15

Jan-1

6

Apr-

16

Jul-

16

Oct-

16

Jan-1

7

Apr-

17

Jul-

17

Oct-

17

Jan-1

8

Apr-

18

Jul-

18

Oct-

18

Jan-1

9

Apr-

19

TEV/EBITDA - Median TEV/EBITDA - Average

12.4x

2.4x

0x

5x

10x

15x

20x

Jul-

14

Oct-

14

Jan-1

5

Apr-

15

Jul-

15

Oct-

15

Jan-1

6

Apr-

16

Jul-

16

Oct-

16

Jan-1

7

Apr-

17

Jul-

17

Oct-

17

Jan-1

8

Apr-

18

Jul-

18

Oct-

18

Jan-1

9

Apr-

19

TEV/EBITDA - Median TEV/Revenue - Median

TEV/EBITDA - Average TEV/Revenue - Average

7

Operational Metrics

LTM Gross Profit Margin % LTM EBITDA %

- 10% 20% 30%

Median

Perficient, Inc.

Capgemini SE

Accenture plc

Cognizant Technology

Solutions Corporation

International Business

Machines Corporation

HCL Technologies Limited

Infosys Limited

Tata Consultancy Services

Limited

- 10% 20% 30% 40% 50%

Median

Capgemini SE

Accenture plc

Infosys Limited


Perficient, Inc.




Limited



8

Operational Metrics

LTM Revenue Growth %LTM Revenue per

Full Time Employee x 000’s

- 5% 10% 15% 20%

Median



Perficient, Inc.

Capgemini SE

Infosys Limited

Accenture plc





Limited

$- $100 $200 $300

Median

Infosys Limited



Capgemini SE

Accenture plc

Perficient, Inc.



9

Operational Metrics

Accounts Receivable TurnoverAverage Days

Sales Outstanding

0x 2x 4x 6x 8x 10x

Median


Capgemini SE

Infosys Limited

Perficient, Inc.



Accenture plc



0 20 40 60 80 100

Median



Accenture plc



Perficient, Inc.

Infosys Limited

Capgemini SE


10

Valuation

TEV / LTM Revenue TEV / LTM EBITDA

0x 2x 4x 6x

Median

Capgemini SE

Perficient, Inc.






Accenture plc

Infosys Limited


Limited

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

Median


Capgemini SE



Infosys Limited

Accenture plc

Perficient, Inc.


Limited

11

Valuation

TEV / LTM EBIT Price / LTM Earnings

0x 10x 20x 30x

Median

International

Business Machines

Corporation

Cognizant

Technology

Solutions

Corporation

Capgemini SE

Infosys Limited

Accenture plc

Tata Consultancy

Services Limited

Perficient, Inc.

0x 10x 20x 30x 40x

Median





Infosys Limited


Limited

Accenture plc

Capgemini SE

Perficient, Inc.

12

Valuation

Historical Valuation Multiples versus Gross Profit

Historical Valuation Multiples versus Revenue Growth Rate

10x 11x 12x 12x 14x 16x 17x 20x

46.4%

35.0%

27.1%

…

34.9%

31.5%

35.8%

45.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0x

5x

10x

15x

20x

25x

LTM

GP%

EBIT

DA(x

)

EBITDA(x) LTM GP%

10x 11x 12x 12x 14x 16x 17x 20x

0.6%

10.2%

5.4%

8.9%

7.9%

8.0%

2.7%

19.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0x

5x

10x

15x

20x

25x

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

11Apr19 LEADCLIC SOLUTIONS S.L. We Are Marketing, S. L. - - - -

30Jan19 Sqware Peg Pty Ltd Simplus - - - -

30Jan19 Digital Transformation Business of Statêra Catalyst IT Services, Inc. - - - -

20Dec18 Oxala Consulting Deloitte Digital - - - -

29Oct18 Elixiter, Inc. Perficient, Inc. 9.70 6.00 1.6x -

26Sep18 System Partners Pty Ltd DXC Technology Company - - - -

24Sep18 Emark B.V. Wunderman Limited - - - -

14Sep18 FLUIDO LTD. Infosys Limited 75.80 - - -

23Aug18 SaaSForce Consulting Pvt. Ltd. Cognizant Technology Solutions Corporation - - - -

20Aug18 Canpango LLC ScanSource, Inc. - - - -

10Jul18 SWC Technology Partners, Inc. BDO USA, LLP - - - -

28Jun18 RO Innovation, Inc. Qvidian Corporation 14.25 6.00 2.4x -

28Jun18 Sybit GmbH itelligence AG - - - -

12Jun18 Gap Consulting Ltd Incremental Group Limited - - - -

6Jun18 Scribe Software Corporation TIBCO Software Inc. - - - -

5Jun18 Third Wave Consulting Inc. Deloitte Digital - - - -

18May18 Certain Assets of Information Systems Management, Inc. SWK Technologies, Inc. 1.30 - - -

30Apr18 Red Sky Solutions LLC Presidio, Inc. - - - -

1May18 Buan Consulting Inc. Spaulding Ridge, LLC - - - -

8Apr18 Red Sky Solutions FMT Consultants, LLC - - - -

1Mar18 Sonnick Partners LLC Pamlico Capital - - - -

14

APPENDIX:

Public Basket

Constituents

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to bedelivered only in conjunction with a verbal 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 was believed to be accurate at the time of authorship and camefrom publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy orcompleteness of third-party data contained herein. This document should be treated as confidential and for the use of the intendedrecipient only. Please notify 7 Mile Advisors if it was distributed in error.

Salesforce PartnersApril 2019

15

Public Basket

Perficient, Inc.

Perficient, Inc. provides information technology andmanagement consulting services in the United States. Thecompany designs, builds, and delivers solutions usingmiddleware software products developed by third-partyvendors. Its solutions include portals and collaboration, such assearchable data systems, collaborative systems for processimprovement, transaction processing, unified and extendedreporting, and other services; and platform implementationsservices, including application server selection, architectureplanning, installation and configuration, clustering foravailability, performance assessment and issue remediation,security, and technology migrations. The company also offersmanagement consulting services in the areas of organizationalchange management, business analytics, project management,process excellence, and other; and cloud services comprisingarchitecture, business value and health checks assessments,strategy and road maps, and vendor evaluation and selectionservices. Perficient, Inc. was founded in 1997 and isheadquartered in St. Louis, Missouri.

Date Key Development Headline10/28/18 Perficient Inc. (NASDAQ:PRFT) acquired Elixiter Inc. for $9.7

million.

0x

1x

2x

3x

Revenue Multiples - Perficient, Inc.

TEV/Revenue Average

0x

5x

10x

15x

20x

EBITDA Multiples - Perficient, Inc.

TEV/EBITDA Average

0x

15x

30x

45x

60x

P/E Multiples - Perficient, Inc.

P/E Average

16

Public Basket


HCL Technologies Limited offers software, informationtechnology (IT) infrastructure, and business process outsourcingservices worldwide. It provides application development andmaintenance services; SAP landscape transformation, systemconversion, and implementation services; Microsoft customerrelationship management, cloud, analytics, infrastructure, andworkplace innovation services; Oracle business consulting,implementation, upgrade, managed, and migration services;and business assurance and testing services, as well asautonomics and orchestration services, products, and platforms.The company also offers data center, workplace, network,mainframe, and service integration and management services.In addition, it provides embedded, software, digital, mechanical,and system and hardware engineering services, as well asproduct lifecycle management, product testing, and VLSI designservices. HCL Technologies Limited was founded in 1976 and isheadquartered in Noida, India.

Date Key Development Headline2/14/19 HCL Technologies Announces Collaboration with IBM to Help

Advance the Hybrid Cloud Journeys of Organizations Worldwide

2/5/19 HCL Technologies (HCL) Partners with Harris Geospatial Solutions Inc. to Provide an Al Driven, Remote Sensing Data Analytics System for its Utilities Customers

1/29/19 HCL Technologies Seeks Acquisitions

0x

1x

2x

3x

4x

5x

Revenue Multiples - HCL Technologies

Limited

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - HCL Technologies Limited

TEV/EBITDA Average

17

Public Basket

Capgemini SE

Capgemini SE provides consulting, technology, and digitaltransformation services. It addresses clients’ opportunities inthe world of cloud, digital, and platforms, as well as enablesorganizations to realize business ambitions through an array ofservices from strategy to operations. The company’sConsulting Services segment offers strategy and transformationconsulting services primarily in digital transformation thatenhance the performance of organizations based on intimateclient relationships, and the knowledge of client industries andprocesses. Its Technology & Engineering Services segmentprovides assistance and support to internal IT teams of clientcompanies. The company’s Application Services segmentdesigns, develops, implements, and maintains IT applications,including system integration and application maintenanceservices. Its Other Managed Services segment integrates,manages, and/or develops client’s IT infrastructure systems, aswell as provides transaction, on-demand, and/or businessprocess outsourcing services. Capgemini SE was founded in1967 and is based in Paris, France.

Date Key Development Headline2/20/19 Capgemini SE (ENXTPA:CAP) completed the acquisition of

Leidos Cyber, Inc. from Leidos Intermediate Holdings, Inc. and others.

2/14/19 Capgemini To Seek Acquisitions

0.0x

0.5x

1.0x

1.5x

2.0xRevenue Multiples - Capgemini SE

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - Capgemini SE

TEV/EBITDA Average

0x

10x

20x

30x

P/E Multiples - Capgemini SE

P/E Average

18

Public Basket

Infosys Limited, together with its subsidiaries, providesconsulting, technology, and outsourcing services in NorthAmerica, Europe, India, and internationally. It provides businessinformation technology services, including applicationdevelopment and maintenance, independent validation,infrastructure management, and business process managementservices, as well as engineering services, such as engineeringand life cycle solutions; and consulting and systems integrationservices comprising consulting, enterprise solutions, systemsintegration, and advanced technologies. Infosys Limited wasfounded in 1981 and is headquartered in Bengaluru, India.

Infosys Limited

Date Key Development Headline3/28/19 Infosys Limited and ABN AMRO Announce Strategic Partnership

in the Netherlands

1/11/19 Infosys Drops Plan To Sell Panaya, Skava and Kallidus

1/9/19 Amazon Web Services, Inc. completed the acquisition of CloudEndure Ltd. from Infosys Limited (NSEI:INFY) and others.

12/26/18 Infosys Seeks Investments

12/14/18 Amazon Web Services, Inc. entered into an agreement to acquire CloudEndure Ltd. from Infosys Limited (NSEI:INFY) and others.

0x

1x

2x

3x

4x

5xRevenue Multiples - Infosys Limited

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - Infosys Limited

TEV/EBITDA Average

0x

10x

20x

30xP/E Multiples - Infosys Limited

P/E Average

19

Public Basket

Cognizant Technology Solutions Corporation

Cognizant Technology Solutions Corporation, a professionalservices company, provides consulting and technology, andoutsourcing services worldwide. The company operatesthrough four segments: Financial Services; Healthcare; Productsand Resources; and Communications, Media and Technology. Itoffers business, process, operations, and technology consultingservices; application design and development, and systemsintegration services; application testing, consulting, andengineering services; and enterprise information managementservices. The company also develops, licenses, implements, andsupports various software products for the healthcare industry,including solutions for health insurance plans, third partybenefit administrators, and healthcare providers. The companywas founded in 1994 and is headquartered in Teaneck, NewJersey.

Date Key Development Headline3/31/19 Cognizant Technology Solutions Corporation (NasdaqGS:CTSH)

completed the acquisition of Oy Samlink AB from Posti Group Oyj, Aktia Bank p.l.c. (HLSE:AKTIA), Oma Säästöpankki Oyj (HLSE:OMASP), Savings Bank Group, Svenska Handelsbanken AB (publ), Asset Management Arm, POP Pankkiliitto osk and other minority shareholders.

3/4/19 Cognizant Technology Solutions Corporation (NasdaqGS:CTSH) acquired Meritsoft from Synova Capital Fund II managed by Synova Capital LLP, 22C Capital and others.

0x

1x

2x

3x

4x

5xRevenue Multiples - Cognizant Technology


TEV/Revenue Average

0x

10x

20x

30xEBITDA Multiples - Cognizant Technology


TEV/EBITDA Average

0x

10x

20x

30x

40x

50xP/E Multiples - Cognizant Technology


P/E Average

20

Public Basket

Accenture plc

Accenture plc provides consulting, technology, and outsourcingservices worldwide. Its Communications, Media & Technologysegment provides professional services that help clientsaccelerate and deliver digital transformation, and enhancebusiness results through industry-specific solutions forcommunications, media, and high tech industries, as well as forsoftware platforms. The company’s Financial Services segmentoffers services that address profitability pressures, industryconsolidation, regulatory changes, and the need to continuallyadapt to new digital technologies. This segment serves clients inbanking, capital markets, and insurance industries. Accentureplc was founded in 1989 and is based in Dublin, Ireland.

Date Key Development Headline4/10/19 Pitney Bowes Inc. and Accenture Team to Help Clients Take

Advantage of Intelligent, Data-Driven Solutions

3/28/19 Accenture plc (NYSE:ACN) agreed to acquire selected assets from Caltec Scube Co., Ltd.

3/14/19 Accenture plc (NYSE:ACN) acquired Storm Digital.

3/4/19 Accenture plc (NYSE:ACN) agreed to acquire Enterprise System Partners Limited.

3/3/19 Accenture plc (NYSE:ACN) acquired ?What If! Limited.

0x

1x

2x

3x

4xRevenue Multiples - Accenture plc

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - Accenture plc

TEV/EBITDA Average

0x

10x

20x

30x

40xP/E Multiples - Accenture plc

P/E Average

21

Public Basket

Tata Consultancy Services Limited

Tata Consultancy Services Limited provides informationtechnology (IT) and IT enabled services worldwide. Thecompany offers CHROMA, a cloud-based talent managementsolution that enables organizations to drive transformationalemployee experiences; ignio, a cognitive automation system;iON, an assessment solution; TAP, a cloud solution, includingTAP contract management, purchasing, accounts payable, andsupplier management solutions; and TCS MasterCraft, aplatform to automate and manage IT processes. It also providescustomer intelligence and insight solutions to deliverpersonalized retail, banking, and communications experiences;Intelligent Urban Exchange, an enterprise software to acceleratesmart city transportation, water, and energy programs for cities;Tata Consultancy Services Limited is a subsidiary of Tata SonsLimited.

Date Key Development Headline2/11/19 Tata Consultancy Services Announces Global Partnership with

JDA Software to Build Next-Generation Cognitive Solutions

1/10/19 TCS Seeks Acquisitions

12/18/18 Tata Consultancy Services Extends Collaboration with Red Hat to Build Microservices-Based Open Source Solutions and Frameworks

11/27/18 Tata Consultancy Services Limited (NSEI:TCS) acquired Assets of BridgePoint Group, LLC.

11/20/18 Tata Consultancy Services Partners with SAP to Build Intelligent Rail Digital Maintenance

0x

2x

4x

6x

8x

10xRevenue Multiples - Tata Consultancy

Services Limited

TEV/Revenue Average

0x

10x

20x

30x

40xEBITDA Multiples - Tata Consultancy Services

Limited

TEV/EBITDA Average

0x

10x

20x

30x

40x

50xP/E Multiples - Tata Consultancy Services

Limited

P/E Average

22

Public Basket

International Business Machines Corporation

International Business Machines Corporation operates as anintegrated technology and services company worldwide. ItsCognitive Solutions segment offers Watson, a cognitivecomputing platform that interacts in natural language,processes big data, and learns from interactions with peopleand computers. This segment also offers data and analyticssolutions, including analytics and data management platforms,cloud data services, enterprise social software, talentmanagement solutions, and solutions tailored by industry; andtransaction processing software that runs mission-criticalsystems in banking, airlines, and retail industries. InternationalBusiness Machines Corporation was founded in 1911 and isheadquartered in Armonk, New York.

Date Key Development Headline4/3/19 Funds advised by affiliates of Centerbridge Partners, L.P. entered

into a definitive agreement to acquire Marketing Platform and Commerce Software Offerings of International Business Machines Corporation (NYSE:IBM).

2/27/19 Nationstar Mortgage LLC completed the acquisition of Seterus, Inc. from International Business Machines Corporation (NYSE:IBM).

2/26/19 SEAT & IBM Revolutionize Urban Mobility with AI

2/14/19 HCL Technologies Announces Collaboration with IBM to Help Advance the Hybrid Cloud Journeys of Organizations Worldwide

2/4/19 McCormick & Company, Incorporated and IBM Announces Collaboration Pioneering the Use of Artificial Intelligence in Flavor and Food Product Development

0x

1x

2x

3x

4x

Revenue Multiples - International Business


TEV/Revenue Average

0x

5x

10x

15x

20x

EBITDA Multiples - International Business


TEV/EBITDA Average

0x

10x

20x

30x

40x

P/E Multiples - International Business


P/E Average

23

CONTACT INFO7MA 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.

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]

Ben Lunka, Managing Director 704.496.2995 [email protected]

Jeff Stoecklein, Managing Director 312.796.9330 [email protected]

Mark Landry, Managing Director 561.972.0609 [email protected]

Kristina Sergueeva, Director 704.899.5149 [email protected]

Neil Churman, Director 281.742.9340 [email protected]

John Cooper, Director 704.973.3996 [email protected]

Tim Frye, Director 704.973.3994 [email protected]

Nicholas Prendergast, Financial Analyst 704.973.3995 [email protected]

Ariail Siggins, Marketing Director 704.981.2908 [email protected]

Sydney Larese, Associate 704.973.3998 [email protected]

Marty Johnson, Associate 704.973.3999 [email protected]

Rory Julyan, Associate 704.981.2520 [email protected]

Garth Martin, Associate 704.973.3997 [email protected]

Dennis Fox, Associate 704.706.9168 [email protected]

Steve Buffington, Associate 704.960.1828 [email protected]

Emily Halstenberg 704.409.9912 [email protected]

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