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Backoffice Industry M&A Corporate Development Deals Commentary.
Backoffice accounting and administration deals driven by the following industry drivers:
Continual movement of larger accounting firms acquiring non‐CPA firms
o Deals driven by digital transformation, industry consolidation, & shift to the cloud
Acquisition by outsourcing firms to acquire books with cross‐selling potential to
both existing and future clients.
o payroll/HR/workforce services (WFM)
o cloud solutions, F&A optimization, spend efficiencies, and analytics
Industry consolidation of reseller trapped into either implementation, consulting or
small business models.
Accounting, Staffing, & Consulting firms needing an external exit option, beyond
internal MBO succession, are going to market during this robust economy, versus
procrastinating to a point where they are faced with accepting winding down.
Backoffice Deal Valuation Multiples.
M&A Subscale Deal Multiples Revenue Valuation
0 0.5 1.0 1.5 2.0 2.5
Staffing Accounting & Consulting Recurring Solutions Outsourcing BPaaS
Industry Valuation Notables
Most accounting deals are priced 80 to 100% of annual revenues (source: AccountingToday.com)
with a premium paid for outsourcing & managed solution providers with long‐term contracts
at 2x revenue multiple for managed solutions.
Professional consulting services have hitorically traded at <1X revenue multiple while scaled
outsourcing solutions have traded at >2X, with additional premium paid for industry centric,
scaled asset (>$25M) with recurring managed solutions. More than 251 professional services
M&A deals between 2017 to 2019 with the majority of subscaled average deal size between
$7m to $14m at 0.5X revenue multiple with 6.8 EBITDA multiple with 65% of deal paid
upfront with remainder over 3 years earnourt.
2018 – Multiple subscale deals <$20m to acquire books by platform across Intacct, Workday,
Netsuite, SAGE, Microsoft, FinancialForce, Acumatica.
2018 – The Rise of the “As‐A‐Service” Economy (“AaS”) as illustrated by more than a $1B in
funding over the past few years creates the opportunity for star performers to realize 2X EV
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Backoffice Deals with Price Valuation Multiple1
2019 ‐ CBIZ (NYSE: CBIZ) acquires The Wenner Group (outsourced F&A CPA with 14 EE and $2.4m revenues).
2018 ‐ Alight acquired Carlson Management Consulting, Sage Intacct & AdaptiveInsights partner with $5.6m in annual revenues and 34 FTE.
2018 – InfoSys Management acquired by SWK Technologies. Reseller of SAGE and Acumatica solutions acquired for $1.7M.
2018 – AcctTwo acquires Leap The Pond ($3.7m, 16 EE).
2018 – Schenck CPAs ($88m, revenues, 400 EE in WI) acquired by CLA.
2018 – TrinTech “the last mile of Finance solutions” [Vista Equity Partners] acquired by Summit Partners (growth equity recap).
2018 ‐ Corporate Finance Group, Inc. (CFGI) acquired by the Carlye Group (secondary buyout).
2018 – Winshuttle acquired by STG – Symphony Technology Group (secondary buyout).
2018 – SWC Technology Partners acquired by BDO USA LLP.
2018 ‐ TaskUs acquired by The Blackstone Group (secondary buyout)
2018 – Accenture acquires DAZSI, DAZ Systems Inc ERP service provider.
2018 – KPMG launches KPMG Spark and acquires Bookly, (Salt Lake City UT HQ)
2018 – Deloitte acquires Legacy Advantage bookkeeping firm.
2018 – Moss Adams acquires Transacction Partners, a firm specailzied in outsourced finance and accounting services.
2018 –Brazilian Quirius acquired by Brazilian Beomex for R$28m.
2018 – Basware acquired by Verdane Capital Advisors. FAO acquired by PEG for $35M eruos.
2018 – TriBridge acquired by DXC Technology (NYSE: DXC) for $152m.
2018 – Info Sys Management acquired by SWK Technologies. Reseller of SAGE and Acumatica solutions acquired for $1.7M.
2018 – AdaptiveInsights acquired by Workday for $1.55B.
2018 – BDO USA LLP accounting & consulting firm acquires Casterline Associates.
2018 – BerganKDV acquires HSMC Orizon, NE CPA and Technology consulting firm.
2018 – RSM US acquires Explore Consulting, Netsuite Consulting partner.
2018 – Aprio LLP acquires HPC Accounting & TAX, tech driven cloud consulting firm.
2018 – Wipfli LLP acquires NE accounting firm Macpage.
2018 – AcctTwo acquires Leap The Pond.
2017 – Accretive Solutions acquired by RGP – Resources Global Professionals, FAO acquired for $19.4m (500 EE, <1X Rev, 4X EBITDA).
2017 – SNI Companies, F&A staffing, acquired by Gee Group for $86m at 0.8X revenue multiple.
2017 – B&G Finance & Accounting acquires SmartResources for $8m at 0.6x EV/Rev multiple.
2016 – Alsbridge acquired by ISG for $74m in cash and stock.
2014 ‐ Monchilla acquired by Xero for $4.1m plus stock (>4x Rev/EV).
2017 – Tsheets [Summit Partners] acquired by Intuit for $340m.
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Backoffice Industry Briefing
Industry Trend Opportunities
→ Industry change from relying on a local bookkeeping service to transformation to a solution model that includes a
cloud/SaaS platform plus services.
→ While the global enterprise market focuses on deals greater than $1M ACV, there are small to midmarket opportunities
demanding a modern platform.
→ Leaders are bundling services with cloud “As‐A‐Service” solutions.
→ Move to the cloud creates portfolio opportunities to bundle and also deliver tools, analytics, and backoffice technical
solutions from Administration to Compliance to WFM/HR.
→ Consolidation among resellers.
→ Acquisition of emerging leaders by Accounting, Consulting, Staffing, and Outsourcing.
FOCUS PROVIDER COUNT DESCRIPTION
FAO Startup to Small Business Top 550
Demand for modern expertise:
Projects plus small monthly retainer pricing
FAO Midmarket Top 200
Driven by demand for digital transformation and move to the cloud:
FaaS pricing model similar to BPaaS + FAO pricing
FAO Industry Leaders Top 40 By Industry
Industry solution includes deeper scope of services and industry software:
Premium pricing for industry preconfigured solutions
F&A Staffing Service Leaders Top 100
Demand for certified professionals as well as analytics & procurement: various
F&A Partners, Vendors and
Hundreds by type
Types include: SI Consulting, VAR, & Sourcing procurement advisors:
Pricing based on implementation consulting plus managed solution fees
Why Conduct an Industry Briefing Checklist
Review Finance‐as‐a‐Service trends, and M&A deal opportunities
Review deal opportunities
o Geographic market expansion
o Industry consolidation
o Recurring managed service solutions
o Technical services, implementation and consulting capabilities
Identify 10X opportunities and ideas to outsmart your competition.
→ For a complete list of opportunities, contact
ERGO to schedule your industry briefing.
Summary of the backoffice accounting & administration M&A deals