Tech-Enabled Services Monthly August 2014 in...
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Tech-Enabled Services Monthly August 2014 in Review Tech-Enabled Services Headline Transactions TEV / Revenue TEV / EBITDA LTM Gross & EBITDA Margins 1-Year Revenue Growth 8.8x 11.8x 8.0x 8.0x 12.5x 12.9x 7.7x 0.0 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info Services VAR TEV / EBITDA 29.4% 35.9% 54.7% 20.0% 37.8% 60.3% 9.2% 10.7% 20.1% 34.0% 4.9% 22.1% 25.6% 2.9% 0% 10% 20% 30% 40% 50% 60% 70% 0% 10% 20% 30% 40% 50% 60% 70% ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info Services VAR LTM EBITDA Margin LTM Gross Margin Note: EBITDA Margins in red Target Acquirer Acquisition Synopsis ITS • • Granite Business Solutions (dba "Evolve Technology Group") provides professional consulting services and technology solutions, including security, collaboration and data center solutions ePlus made its first acquisition in 2014 with the acquisition of Granite Business Solutions to expand its presence in the western U.S. and broaden its product portfolio and managed services offering VAR • • Intersmart distributes information technology products throughout Latin America, offering various corporate solutions in the areas of unified comunications and collaboration ScanSource acquired Intersmart for $135.3 million as part of an aggressive expansion strategy to become a leading VAR in Latin America following its 2011 acquisition of CDC Brasil for $65.5 million ITS • • Professional Access provides consulting services, including business analysis and assessment, technology assessment and IT enabled services, such as application development and SI Zensar Technologies acquired Professional Access to strengthen its ORCL retail and e-Commerce capabilities and bolster its roster of ORCL personnel ITS • • Oakton Limited provides IT solutions, business consulting, financial management & assurance services, risk management, delivery services & solution design and application management services Dimension Data offered $156.3 million to purchase Oakton, representing ~30% premium on Oakton's current share price, to strengthen its IT consulting presence in Australia Mgd. Svs. Workday Consulting Practice • • The Workday Consulting Practice of AXIA Consulting comprises enterprise cloud applications for finance and human capital management, which is an extremely hot area in the ITS sector KPMG continues its string of acquisitions in 2014 with the acquisition of the Workday Consulting Practice of AXIA Consulting to strengthen its HCM and technology enablement capabilities 0.9x 2.4x 2.5x 0.4x 3.0x 3.2x 0.2x 0.0 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info Services VAR TEV / Revenue 18% 3.5% 16.2% 12.1% 8.2% 7.3% 6.4% 8.6% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info Services VAR 1-Year Revenue Growth
Transcript of Tech-Enabled Services Monthly August 2014 in...
Tech-Enabled Services MonthlyAugust 2014 in Review
Tech-Enabled Services Headline Transactions
TEV / Revenue TEV / EBITDA
LTM Gross & EBITDA Margins1-Year Revenue Growth
8.8x
11.8x
8.0x 8.0x
12.5x 12.9x
7.7x
0.0
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
ITS Offshore ITS HostingServices
IT Staffing TransactionProcessing
Info Services VAR
TEV
/ EBI
TDA
ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info. & Data VAR
29.4%
35.9%
54.7%
20.0%
37.8%
60.3%
9.2% 10.7%
20.1%
34.0%
4.9%
22.1% 25.6%
2.9%
0%
10%
20%
30%
40%
50%
60%
70%
0%
10%
20%
30%
40%
50%
60%
70%
ITS Offshore ITS HostingServices
IT Staffing TransactionProcessing
Info Services VAR
LTM EBITD
A M
arginLTM
Gro
ss M
argi
n
Note: EBITDA Margins in red
Target Acquirer Acquisition Synopsis
ITS
•
•
Granite Business Solutions (dba "Evolve Technology Group") provides professional consulting services and technology solutions, including security, collaboration and data center solutionsePlus made its first acquisition in 2014 with the acquisition of Granite Business Solutions to expand its presence in the western U.S. and broaden its product portfolio and managed services offering
VAR
•
•
Intersmart distributes information technology products throughout Latin America, offering various corporate solutions in the areas of unified comunications and collaborationScanSource acquired Intersmart for $135.3 million as part of an aggressive expansion strategy to become a leading VAR in Latin America following its 2011 acquisition of CDC Brasil for $65.5 million
ITS
•
•
Professional Access provides consulting services, including business analysis and assessment, technology assessment and IT enabled services, such as application development and SIZensar Technologies acquired Professional Access to strengthen its ORCL retail and e-Commerce capabilities and bolster its roster of ORCL personnel
ITS
•
•
Oakton Limited provides IT solutions, business consulting, financial management & assurance services, risk management, delivery services & solution design and application management servicesDimension Data offered $156.3 million to purchase Oakton, representing ~30% premium on Oakton's current share price, to strengthen its IT consulting presence in Australia
Mgd
. Svs
.
Workday Consulting Practice
•
•
The Workday Consulting Practice of AXIA Consulting comprises enterprise cloud applications for finance and human capital management, which is an extremely hot area in the ITS sectorKPMG continues its string of acquisitions in 2014 with the acquisition of the Workday Consulting Practice of AXIA Consulting to strengthen its HCM and technology enablement capabilities
1. Headline Transactions
0.9x
2.4x 2.5x
0.4x
3.0x 3.2x
0.2x
0.0
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
ITS Offshore ITS HostingServices
IT Staffing TransactionProcessing
InfoServices
VAR
TEV
/ Rev
enue
18%
Services Processing Services
3.5%
16.2%
12.1%
8.2% 7.3%
6.4%
8.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
ITS Offshore ITS HostingServices
IT Staffing TransactionProcessing
InfoServices
VAR
1-Ye
ar R
even
ue G
row
th
Select TM Capital Tech-Enabled Services Experience TM Capital’s Tech-Enabled Services Contacts
Bradford A. Adams Managing Director
617-259-2203 [email protected]
Jarrad S. Zalkin Managing Director
617-259-2207 [email protected]
Andrew O. Redmond Vice President 617-259-2215
Select Tech-Enabled Services Precedent M3. TES Transactions Transactions
9/17/2014
Annc. Date Sector Acquirer Target Target Description
Enterprise Value Comments
08/28/14 IT Staffing All Lines Technology Inc.
LANtek Computer Service LLC
Provides IT consulting and IT staffing services NA All Lines Technology acquired LANtek to addcomplementary IT staffing services and softwaresolutions to its IT infrastructure/hardware offerings.
08/26/14 Managed Services
Cable & Wireless Panama S.A.
Grupo Sonitel Provider of information technology services,including end-to-end managed IT solutionsand telecom services
$41.0 Acquisition of Grupo Sonitel aligns with Cable &Wireless' strategy to enhance its B2B and government capabilities and provides complementary managedservices.
08/21/14 VAR ScanSource, Inc.
Imago Group plc Distributes video communication solutions,including cloud based video service solutions,infrastructure solutions andvideoconferencing solutions
$40.6 ScanSource announced the execution of a non-binding LOI to acquire Imago to bolster its marketshare in Europe. The acquisition would representScanSource's second deal in August 2014.
08/19/14 Hosting Services
Datapipe, Inc. Layered Technologies, Inc.
Provider of self-managed server services,including on-demand hosting and utilitycomputing services
NA Abry Partners-backed Datapipe acquired LayeredTechnologies to enhance its expertise in managedcloud services and introduce new solutions for thegovernment sector.
08/18/14 VAR Arrow Electronics, Inc.
CNT Brasil Distribuidora Ltda.
Distributes computing products NA Arrow Electronics acquired CNT Brasil to strengthenits product portfolio and expand its geographicfootprint. CNT Brasil represents Arrow's firstacquisition in 2014.
08/07/14 IT Services TIVIT Terceirização de Tecnologia e Serviços S/A
Synapsis Soluciones y Servicios IT Limitada
Specializes in the implementation,development, and operation of SAP solutionsand SAP outsourcing services
$196.9 Acquisition of Synapsis bolsters TIVIT's presence inLatin America, specifically northeast Brazil, and willprovide TIVIT with 5 data centers. Synapsis isestimated to generate $150 million revenue in 2014.
08/05/14 Hosting Services
Node4 Ltd. LETN Solutions Ltd.
Provides managed support, professionalservices and hosting services to small andmid-size organizations
NA Node4 acquired LETN Solutions to expand its productportfolio of cloud solutions. LETN also offers NetAppexpertise as one of 18 qualified NetApp partners inthe UK.
Select Tech-Enabled Services Transactions Announced in August 2014
www.tmcapital.com
New York641 Lexington Avenue30th FloorNew York, NY 10022Tel: 212.809.1360
Boston200 Clarendon Street25th FloorBoston, MA 02116Tel: 617.259.2200
Atlanta15 Piedmont Center NE Suite 1010Atlanta, GA 30305 Tel: 404.995.6230
TEV / EBITDA Multiples Over Time
8.8x
11.8x
8.0x
8.0x
12.5x
12.9x
7.7x3.0x
5.0x
7.0x
9.0x
11.0x
13.0x
15.0x
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Aug 2014
TEV
/ EBI
TDA
ITS Offshore ITS Hosting Services IT Staffing Transaction Processing Info. & Data VAR
Notes: USD in millions Source: Capital IQ, Company SEC Filings, industry research and TM Capital estimates
