TECHNOLOGY & BUSINESS SERVICES - STRATEGIC MARKET INSIGHTS Q2 2020 REPORT - G2 Capital Advisors
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TECHNOLOGY &
BUSINESS SERVICES
STRATEGIC MARKET INSIGHTS
Q2 2020 REPORTTechnology & Business Services
Industry / Market Insights
G2 is seeing a resurgence in M&A activity and a cautious return and stabilization within the
credit markets as equity sponsors and lenders alike are moving past portfolio triage and
looking for opportunities to deploy pent-up capital. In this Newsletter, we will demonstrate the
recent impacts on key Technology & Business Services sectors and how the related M&A
market has performed in the 2nd quarter of 2020.
>> E-Commerce> Real Estate Technology & ServicesTechnology & Business Services
Industry / Market Insights (Cont.)
>> Human Capital Management> IT Managed ServicesTechnology & Business Services
Industry / Market Insights (Cont.)
>> IT ConsultingTechnology & Business Services
Technology & Business Services Transactions
Several notable transactions have been completed or announced in the Technology &
Business Services industries through Q2 2020. G2 has outlined select transactions below.
§ ICS acquired Brightworks Computer Consulting (4/8/2020) – ICS, a managed IT services
provider, acquired Brightworks, a provider of system designing & consulting, system
networking, and security systems, for an undisclosed amount.
§ Cornerstone OnDemand acquired Saba Software (4/22/2020) – Cornerstone OnDemand, a
cloud-based talent management platform, acquired Saba Software, a provider of cloud-based,
intelligent talent management systems, for $1.3B.
§ Saalex Information Technology acquired Valeo Networks (4/23/2020) – Saalex
Information Technology, a full-service IT company, acquired Valeo, a provider of IT consulting
services, for an undisclosed amount.
§ Assurance Software acquired Avalution Consulting (4/28/2020) – Assurance Software,
the largest provider of business continuity management software and services, acquired
Avalution Consulting, a provider of business continuity solutions, for an undisclosed amount.
§ Accenture acquired Kates Kesler (05/06/2020) – Accenture, a leading global professional
services company, has acquired Kates Kesler, an organization design consultancy helping
companies execute their growth strategies, for an undisclosed amount.
§ Zoom acquired Keybase (05/07/2020) – Zoom, the leader in modern enterprise video
communications, acquired Keybase, a startup with encryption expertise, for an undisclosed
amount.
§ APC Holding acquired Sequential Technology International (5/11/2020) – APC Holdings,
a private investment and corporate development firm, acquired Sequential Technology
International, a provider of consulting services, for an undisclosed amount.
§ Atlassian acquired Halp (05/12/2020) – Atlassian, a provider of software development and
collaboration tools, has acquired Halp, which creates help desk ticketing tools inside Slack, for
an undisclosed amount.
§ The Acacia Group and Parabellum Capital acquired Column Technologies (5/15/2020) –
Private equity firms The Acacia Group and Parabellum Capital acquired Collumn
Technologies, a provider of technology consulting systems, for an undisclosed amount.
§ Facebook acquired Giphy (05/15/2020) – Facebook, the social media conglomerate, has
acquired Giphy, a database and search engine for short looping videos known as “GIFs”, for
$400MM.
§ Cisco acquired ThousandEyes (05/28/2020) – Cisco, a provider of networking, security, and
collaboration products, announced its intent to acquire ThousandEyes, a cloud-based network
intelligence specialist, for ~$1B.
§ Worldwide Facilities acquired Strategic Underwriting Solutions (6/10/2020) – Worldwide
Facilities, a wholesale insurance brokerage firm, acquired Strategic Underwriting Solutions, a
provider of customized stop-loss insurance coverage, for an undisclosed sum.
Source: S&P Capital IQ
www.g2cap.com 5Technology & Business Services
Technology & Business Services Transactions
Several notable transactions have been completed or announced in the Technology &
Business Services industries through Q2 2020. G2 has outlined select transactions below.
§ Just Eat Takeaway.com acquired Grubhub (6/10/2020) – Takeaway.com, a Dutch company
specialized in online food ordering and home delivery, acquired Grubhub, a leading online and
mobile prepared food ordering and delivery platform, for $7.3B.
§ Cognizant Technology Solutions acquired Collaborative Solutions (6/12/2020) –
Cognizant Technology Solutions, a global IT services provider, acquired Collaborative
Solutions, a provider of cloud-based business consultancy, for $385MM.
§ Accenture acquired Sentelis (06/15/2020) – Accenture, a leading global professional
services company, announced its intent to acquire Sentelis, a data consulting and engineering
company, for an undisclosed amount.
§ Mastercard acquired Fincity (06/23/2020) – Mastercard, a global payments technology
company, announced its intent to acquire Finicity, a leading North American provider of real-
time access to financial data and insights, for $825MM.
§ Amazon acquired Zoox (06/26/2020) – Amazon, a cloud computing giant and the largest
American e-commerce company, has acquired Zoox, self-driving startup, for ~$1B.
§ OJO Labs acquired Movoto (06/30/2020) – OJO Labs, a provider of personalized property
recommendations and insights, has acquired Movoto, a residential real estate search site with
nearly 24MM monthly visits, for an undisclosed amount.
§ Lululemon acquired Mirror (06/30/2020) – Lululemon, an athletic apparel retailer, has
announced its intent to acquire Mirror, a maker of digital workout displays, for $500MM.
§ Google acquired North (06/30/2020) – Google, the leading internet-related services provider,
acquired North, a maker of augmented reality (AR) interfaces and smart glasses, for
~$180MM.
§ USI Insurance Services acquired Associated Benefits and Risk Consulting (6/30/2020) –
USI, a provider of middle-market insurance brokerage services, acquired Associated Benefits
and Risk Consulting, a human resources consulting firm, for $265.8MM.
§ Zynga acquired Peak (7/1/2020) – Zynga, a platform that operates social games and
networking sites, acquired Peak, a developer of online card and puzzle games, for $1.9B.
§ Uber acquired Postmates (07/06/2020) – Uber, the leading rideshare and delivery services
provider, has acquired Postmates, a food delivery provider, for ~$2.7B.
§ DocuSign acquired Liveoak Technologies (07/07/2020) – DocuSign, a provider of digital
transaction management services, acquired Liveoak Technologies, a virtual customer
engagement and business platform, for $38MM.
Source: S&P Capital IQ
www.g2cap.com 6Technology & Business Services
Public Trading EV/EBITDA Performance
Overall valuations across the sub-sectors rebounded significantly since the 33% Covid-19
driven decline between February and March, with a 39% increase between April and June.
Q2 2020 EV / LTM Revenue by Sub-Sector
14.0x
12.1x
12.0x 11.5x
10.0x
8.0x
6.0x Average: 5.5x
4.0x
1.8x
2.0x 1.4x
0.5x
0.0x
Real Estate Technology E-Comme rce IT Consulting IT Managed Services Human Capital
& Services Ma nagement
LTM EV/EBITDA Performance YTD 2020 EV/EBITDA Performance
20% 20%
15% 30
15% 6/
–
10% 1
10% 4/
m
5% fro
5% e
0% as
cre
0% in
-5% %
-5% 39
-10%
-15% -10%
-20% -15%
-25% -20%
-30%
-25%
Feb-20
Jan-20
Jun-20
Jul-19
Ma y-20
Aug-19
Sep-19
Nov-19
Dec-19
Oct-19
Apr-20
Ma r-20
-30%
1/1 1/21 2/10 3/1 3/21 4/10 4/30 5/20 6/9 6/29
TBS EV/EBITDA S&P 500 EV/EBITDA
Data sourced from S&P Capital IQ as of trading on June 30, 2020
www.g2cap.com 7Technology & Business Services
Public Trading EV/EBITDA Performance by Segment
While sectors saw declines at the onset of COVID-19, they have since rebounded, with the E-
Commerce and Real Estate Technology & Services sectors trending positively on an LTM basis.
E-Commerce Real Estate Technology & Services
50% 25%
40% 20%
15%
30%
10%
20% 5%
10% 0%
0% -5%
-10% -10%
-15%
-20%
-20%
-30% -25%
20
20
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20
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IT Managed Services IT Consulting
20% 20%
10% 10%
0%
0%
-10%
-10%
-20%
-20%
-30%
-30%
-40%
-40% -50%
20
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LTM Rev. EBITDA LTM EV/EBITDA
Human Capital Management Growth Margin Performance
20% E-Commerce 11% 5% 37%
Real Estate Technology 15%
10% 19% 28%
& Services
0% IT Managed Services -14%
6% 12%
-10% IT Consulting 4% 15% -13%
-20% Human Capital
-1% 6% -19%
-30% Management
-40%
S&P 500 3% 18% 7%
-50%
20
20
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TBS EV/EBITDA S&P 500 EV/EBITDA Data sourced from S&P Capital IQ as of trading on June 30, 2020
www.g2cap.com 8Technology & Business Services
Public Trading Metrics by Sector
Enterprise Share LTM Rev. LTM Margins TEV / LTM:
Company Name Value ($mils) Stock Price Growth EBITDA EBIT Revenue EBITDA EBIT
E-Commerce
Amazon.com, Inc. $ 1,404,892 $ 2,758.82 17.5% 12.2% 4.7% 4.7x 34.2x 101.4x
Shopify Inc. $ 111,083 $ 949.20 33.3% (7.7%) (9.8%) 64.3x NM NM
eBay Inc. $ 41,620 $ 52.45 1.3% 28.5% 22.3% 3.9x 12.6x 17.3x
Wix.com Ltd. $ 12,924 $ 256.22 18.1% (9.1%) (11.3%) 16.1x NM NM
Kinaxis Inc. $ 3,550 $ 142.66 21.8% 19.3% 15.5% 17.2x 80.9x 110.6x
Pitney Bowes Inc. $ 2,556 $ 2.60 2.5% 11.6% 6.6% 0.8x 5.7x 12.1x
SPS Commerce, Inc. $ 2,432 $ 75.12 8.7% 20.8% 14.9% 8.5x 37.1x 57.1x
Yext, Inc. $ 1,838 $ 16.61 28.2% (39.2%) (41.0%) 5.8x NM NM
InnerWorkings, Inc. $ 233 $ 1.32 3.2% 3.3% 2.8% 0.2x 4.5x 7.3x
PFSweb, Inc. $ 196 $ 6.68 (3.2%) 4.9% 0.8% 0.8x 7.4x 100.2x
Park City Group, Inc. $ 71 $ 4.23 (10.6%) 10.4% 6.8% 3.8x 36.3x 55.7x
Average $ 143,763 $ 387.81 11.0% 5.0% 1.1% 11.5x 27.3x 57.7x
Real Estate Technology &
Services
CoStar Group, Inc. $ 26,689 $ 710.67 13.1% 29.5% 23.6% 18.2x 57.9x 77.2x
Black Knight, Inc. $ 12,895 $ 72.56 3.5% 33.9% 25.8% 10.9x 37.2x 51.5x
Zillow Group, Inc. $ 12,437 $ 57.48 93.8% (5.1%) (7.4%) 3.6x NM NM
REA Group Limited $ 9,977 $ 74.48 (3.0%) 47.8% 46.0% 15.9x 34.2x 35.5x
RealPage, Inc. $ 7,534 $ 65.01 10.8% 16.9% 9.5% 7.3x 39.9x 77.1x
CoreLogic, Inc. $ 7,004 $ 67.22 3.2% 23.2% 14.9% 3.9x 16.0x 26.2x
Rightmove plc $ 5,852 $ 6.76 7.5% 74.5% 74.0% 16.3x 21.8x 22.1x
AppFolio, Inc. $ 5,642 $ 162.71 22.7% 6.6% 3.4% 20.8x 245.5x NM
Average $ 11,004 $ 152.11 18.9% 28.4% 23.7% 12.1x 64.6x 48.3x
IT Managed Services
Accenture plc $ 134,139 $ 214.72 4.4% 16.2% 14.7% 3.0x 16.5x 20.5x
Capgemini SE $ 21,245 $ 114.73 1.4% 12.8% 10.9% 1.3x 9.1x 12.3x
DXC Technology Company $ 12,345 $ 16.50 (3.9%) 17.1% 8.5% 0.6x 3.0x 7.4x
Insight Enterprises, Inc. $ 2,761 $ 49.20 16.7% 3.8% 3.1% 0.3x 8.0x 10.8x
Virtusa Corporation $ 1,346 $ 32.47 3.6% 8.5% 6.1% 1.0x 10.7x 16.9x
Perficient, Inc. $ 1,312 $ 35.78 8.6% 14.0% 10.5% 2.3x 14.3x 21.7x
Rimini Street, Inc. $ 448 $ 5.15 10.7% 8.7% 8.1% 1.5x 17.6x 19.0x
Average $ 24,799 $ 66.94 5.9% 11.6% 8.8% 1.4x 11.3x 15.5x
Data sourced from S&P Capital IQ as of trading on June 30, 2020. Size figures in Millions USD (converted where necessary)
www.g2cap.com 9Technology & Business Services
Public Trading Metrics by Sector (Cont.)
Enterprise Share LTM Rev. LTM Margins TEV / LTM:
Company Name Value ($MM) Stock Price Growth EBITDA EBIT Revenue EBITDA EBIT
IT Consulting
Accenture plc $ 134,139 $ 214.72 4.4% 16.2% 14.7% 3.0x 16.5x 20.5x
Infosys Limited $ 38,879 $ 9.74 5.6% 23.9% 21.3% 3.1x 12.4x 14.3x
Cognizant Technology Solutions $ 29,833 $ 56.82 2.7% 20.1% 17.1% 1.8x 8.3x 10.6x
Capgemini SE $ 21,245 $ - 1.4% 12.8% 10.9% 1.3x 9.1x 12.3x
CGI Inc. $ 19,054 $ 62.88 (5.3%) 17.6% 15.4% 2.1x 11.2x 13.7x
Wipro Limited $ 13,439 $ 3.31 (5.8%) 19.1% 16.6% 1.7x 8.3x 10.0x
DXC Technology Company $ 12,345 $ 16.50 (3.9%) 17.1% 8.5% 0.6x 3.0x 7.4x
Genpact Limited $ 8,489 $ 36.52 11.0% 15.1% 11.7% 2.3x 13.5x 19.9x
TTEC Holdings, Inc. $ 2,596 $ 46.56 7.0% 12.4% 8.2% 1.5x 9.9x 18.9x
Virtusa Corporation $ 1,346 $ 32.47 3.6% 8.5% 6.1% 1.0x 10.7x 16.9x
Huron Consulting Group Inc. $ 1,333 $ 44.25 7.9% 11.8% 8.5% 1.5x 11.2x 17.6x
Perficient, Inc. $ 1,312 $ 35.78 8.6% 14.0% 10.5% 2.3x 14.3x 21.7x
Rimini Street, Inc. $ 448 $ 5.15 10.7% 8.7% 8.1% 1.5x 17.6x 19.0x
The Hackett Group, Inc. $ 392 $ 13.54 1.4% 15.3% 13.7% 1.5x 9.1x 10.9x
Average $ 20,346 $ 41.30 3.5% 15.2% 12.2% 1.8x 11.1x 15.3x
Human Capital Management
Randstad N.V. $ 9,807 $ 44.63 (5.1%) 4.1% 3.3% 0.4x 7.5x 11.3x
Adecco Group AG $ 8,581 $ 46.95 (6.6%) 4.6% 4.0% 0.3x 5.9x 8.2x
Robert Half International Inc. $ 5,986 $ 52.83 3.0% 11.0% 9.9% 1.0x 8.0x 9.9x
ASGN Inc. $ 4,604 $ 66.68 6.9% 10.4% 8.1% 1.2x 10.1x 14.2x
ManpowerGroup Inc. $ 4,384 $ 68.75 (3.7%) 3.6% 3.2% 0.2x 4.8x 6.6x
Hays plc $ 2,738 $ 1.47 5.4% 3.9% 3.6% 0.4x 8.4x 9.9x
Conduent Inc. $ 2,214 $ 2.39 (10.2%) 10.6% 0.0% 0.5x 3.6x NM
PageGroup plc $ 1,531 $ 4.68 6.5% 9.5% 8.9% 0.7x 6.4x 8.4x
Kforce Inc. $ 696 $ 29.25 2.5% 6.1% 5.8% 0.5x 7.7x 9.0x
Kelly Services, Inc. $ 663 $ 15.82 (5.0%) 2.1% 1.5% 0.1x 4.7x 8.8x
TrueBlue, Inc. $ 600 $ 15.27 (6.5%) 4.1% 2.5% 0.3x 4.8x 10.2x
Barrett Business Services, Inc. $ 337 $ 53.13 1.0% 5.6% 5.2% 0.4x 5.4x 6.9x
BG Staffing, Inc. $ 170 $ 11.32 2.7% 8.1% 6.5% 0.6x 6.4x 8.8x
Volt Information Sciences, Inc. $ 106 $ 1.29 (10.8%) (0.4%) (1.3%) 0.1x 17.2x NM
Computer Task Group, Inc. $ 62 $ 4.03 0.7% 2.9% 2.1% 0.2x 3.5x 7.6x
Average $ 2,832 $ 27.90 (1.3%) 5.7% 4.2% 0.5x 6.9x 9.2x
Data sourced from S&P Capital IQ as of trading on June 30, 2020. Size figures in Millions USD (converted where necessary)
www.g2cap.com 10Technology & Business Services
Selected Ongoing G2 Projects
G2 has a robust backlog of mandates ranging across its sell-side, buy-side, capital
markets, and restructuring service offerings.
Project Sapphire § Project Sapphire – G2 is currently advising on the financing process of a leading
technology solutions provider serving some of the largest telecommunications
Financing companies worldwide.
Technology Solutions
Project Apex § Project Apex – G2 is currently advising on the sale of a highly specialized Oracle
Sell-Side HCM Cloud implementation business serving large and mid-size companies across a
broad range of industries in the United States.
Cloud Consulting and
Implementation
Project Strike § Project Strike – G2 is currently advising on the sale of a leading omnichannel
Sell-Side marketing services provider serving a blue chip client base across a number of industries
in the United States and Canada.
Technology-Enabled
Services
Project Swipe § Project Swipe – G2 is currently advising a leading private equity-backed senior level
executive search and human capital management services firm. The Company offers
Buy-Side retained search, RPO on Demand for bulk hiring and project hiring needs, and licensing
Executive Search and usage of its products to improve internal hiring. G2 is providing pipeline support for
the Companies expansion into senior ranking F&A interim and fractional staffing.
Project Diamond § Project Diamond – G2 is currently advising on the sale of a leading B2B marketing
Sell-Side and media services platform serving executive-level professionals in driving high-value
lead generation strategies through digital media and event offerings.
Technology-Enabled
Services
Project Fiesta § Project Fiesta – G2 is currently advising a private equity backed event service
Restructuring provider offering rental products and equipment for corporate and social events.
Business Process
Outsourcing
Project Vancouver § Project Vancouver – G2 is currently advising a private equity backed event service
Restructuring provider offering rental products and equipment for weddings, and corporate and social
events.
Business Process
Outsourcing
Project Expo § Project Expo – G2 is currently providing financial advisory services for a private
equity-backed technology rental and services company in support of the Company's
Restructuring evaluation of strategic alternatives.
Technology-Enabled
Services
Project Shop § Project Shop – G2 is currently providing financial advisory services for a customer
Restructuring experience management business in support of the Company's evaluation of strategic
alternatives.
Customer Experience
Management
www.g2cap.com 11Reference
Contact & Glossary of Terms
Jeffrey Unger, CEO
junger@g2cap.com
617.918.7929
Matt Konkle, Sr. Managing Director Bisma Ahmed, Senior Associate
Head of Industry Teams bahmed@g2cap.com
mkonkle@g2cap.com 512.888.1535
317.371.6608
Term Definition
Total revenue from the sale of goods and services rendered during the reporting period, in normal course of
Revenue business, reduced by sales returns and allowances, and sales discounts. For banks, this item is defined as net
interest income after loan loss provisions
Earnings before interest, taxes, depreciation, and amortization. Calculated as Revenue – Expenses, excluding
EBITDA
interest, taxes, depreciation and amortization
Market value of a company using most recently reported basic weighted average shares outstanding.
Market Cap
Calculated as Market Price (as of period end) * Basic Weighted Average Shares Outstanding
Sum of the carrying values as of the balance sheet date of long-term debt with a maturity beyond one year or
Long-Term Debt
the normal operating cycle, if longer
Net Debt shows the company’s overall debt situation by netting the value of debts with cash and other similar
Net Debt
liquid assets. Calculated as Total Debt – Cash & Cash Equivalents and Short Term Investments
Enterprise Value represents the combined economic value of a company as of the most recent fiscal year end.
Enterprise Value Calculated as Diluted Market Capitalization + Total Debt + Minority Interest + Preferred Stock – Cash and Short
Term investments
A valuation ratio of a company stock price compared to its per share earnings. Calculated as Market Price /
P/E
Earnings per Share for the last annual period
Tangible Book Value Total Shareholder’s Equity – Goodwill and Intangible Assets
For more information about G2, please visit: www.g2cap.com
Our corporate headquarters is located at: 420 Boylston Street, Suite 302, Boston, MA 02116
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The information included in this Presentation is not a complete analysis of all material facts regarding any company, industry,
or security and does not constitute investment advice. Opinions expressed or implied by the materials here presented reflect
only the judgement of its author as of the date of the Presentation and is subject to change without notice. The information in
this Presentation has been obtained from sources which G2 generally considers reliable, but we make no representation or
warranty, express or implied, as to the accuracy or completeness of any information herein. This Presentation has been
prepared for informational purposes only and upon the express understanding that it will be used only for the purposes set
forth in the Section captioned G2 Overview above. G2 expressly disclaims any and all liability which may be based on such
information, errors therein or omissions there from. Securities offered through Western International Securities, Inc. Member
FINRA & SiPC. G2 Securities and Western International Securities are separate and unaffiliated entities.
www.g2cap.com 12You can also read
