M&A report Hampleton Focus Area - it service & outsourcing - oct 2013


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M&A report Hampleton Focus Area - it service & outsourcing - oct 2013

  1. 1. M&A Report, October 2013 M&A Report, October 2013 IT Services, Outsourcing and Distribution
  2. 2. Company Background Service Focus • Equity transactions in software and Internet industry`` • Sell-side representation • M&A advisory and sale of significant stakes to strategic or financial buyers Team Strength • Founded by senior tech industry banker and executives • Directors with both operational and M&A experience • Supported by London based research and financial analysts Sector Specialisation • Research oriented firm • Sector Principals – active domain experts • Industry sector focus October 2013
  3. 3. Focus Areas Hampleton is a highly focused firm that concentrates on specific segments of the IT industry. Our international team of experienced sector principals provide in-depth analysis and research into our focus areas. October 2013
  4. 4. IT Services, Outsourcing and Distribution “The IT services segment continues to have higher valuations for their companies, up 18% since Jan 2011” $35 M ` Median value of all disclosed value transactions: Jan 2011-July 2013 $450 M Total disclosed value of this focus area: Jan 2011-July 2013 October 2013
  5. 5. Market Outlook Total transaction count and median revenue multiples: January 2011 – July 2013 200 1.1x 1.1x 1.1x 0.9x Sub-Sector Overview 1.3x IT Outsourcing 35% 150 Integration Services 34% 100 31% 50 0 1H 2011 2H 2011 Deal Counts 1H 2012 2H 2012 1H 2013 Distribution & Technological Supports The chart above shows the total number of deal counts for each sub-sector between 1H 2011 and 1H 2013. Median revenue multiple The IT services segment, which comprises Integration Services, Distribution and Outsourcing in our report, has continued to perform well since Jan 2011 with its highest multiple of the period at the end of July 2013 at 1.3x. One of the notable deals that buoyed the median multiple in the sector was the Accenture acquisition of the digital marketing and eCommerce services company, Acquity Group Ltd. [NYSE MKT: AQ], for 2.0x times revenues. October 2013
  6. 6. Geography of Transactions Headquarters of Acquirers purchasing European Targets Target Headquarters $7.2 B Europe Total disclosed value of European Target transactions 4% 70% 19% 50% 46% 11% 50% Percentage of European targets purchased by European acquirers European targets in the IT services segment have become more attractive to acquirers. After a downward trend in volume from Jan 2011 – 2012, European target M&A transactions are up 5% in the last two half-years. Data from the first six months of 2013 suggests that European targets accounted for 20% of worldwide transaction volume in IT services. European targets are more likely to be acquired by European companies. Pure European acquisitions accounted for 50% of the volume in the sector. Norwegian Atea ASA was the most active buyer, acquiring 3 Integration Services companies since 2011. October 2013
  7. 7. Sub-Sector Breakdown Distribution & Technology Supports IT Outsourcing 60 60 50 50 40 40 30 30 20 20 10 10 0 1H 2011 2H 2011 1H 2012 2H 2012 1H 2013 Total Transaction Count Integration Services 60 50 1H 2011 2H 2011 1H 2012 2H 2012 1H 2013 Total Transaction Count Within IT Services throughout the five-half year period, Outsourcing had the largest number of completed deals at 195. Moreover, both its median value and median revenue multiple were the highest of the three sub-sectors at $59 million and 1.4x respectively. Integration Services had the highest transaction volume among the sub-sectors in the first six months of 2013. 24 transactions were completed with a median value of $10 million per transaction. 40 30 20 10 0 0 80% of European IT Outsourcing targets were acquired by European companies, with only 20% being acquired by North American buyers during the first half 2013. 1H 2011 2H 2011 1H 2012 2H 2012 1H 2013 Total Transaction Count The Distribution & Technology Supports sub-sector accounted for 18 transactions during the first half of 2013. While deal volume remained steady from July 2011-12 and then dropped, the median revenue multiple of 2.0x climbed to its highest level since Jan 2011. October 2013
  8. 8. Contact Details Jo Goodson Miro Parizek Senior Director jo@hampletonpartners.com Mobile: +44 7551-156452 Skype: jogood1964 Principal Partner miro@hampletonpartners.com Mobile: +44-7551-156-453 Skype: miro.parizek 16 Hanover Square London W11 SLT United Kingdom October 2013
  9. 9. Hampleton Professionals Jo Goodson Senior Director Thomas Berglund Associate Partner Lynda Tripp Senior Editor Henrik Jeberg Director Frank Berger Associate Partner Neal McCleave Sector Principal Rachel Muzyczka Analyst Miro Parizek Principal Partner Axel Brill Director Christian Daher Sector Principal Vu Nguyen Analyst Alexander Franke Sector Principal Ramakanth Desai Senior Advisor October 2013
  10. 10. Hampleton provides independent M&A and corporate finance advice to owners of Internet, IT Services and Software companies. Our research aim to provide our clients with current analysis of the transactions, trends and valuations within our focus areas. Data Source: We have based our findings on data provided by industry recognised sources. Data and information for this publication was collated from the 451 Research database (www.451research.com), a division of The 451 Group. Disclaimer: This publication contains general information only and Hampleton Ltd. is not, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. Hampleton Limited shall not be responsible for any loss whatsoever sustained by any person who relies on this publication. © 2013. For more information, contact Hampleton Ltd. London 16 Hanover Square W1S1HT United Kingdom San Francisco 1 Sutter St CA 94104 United States Email jo.goodson@hampletonpartners.com October 2013