Why the time is right to sell your IT services business

transcript

Confidential© Equiteq 2016 equiteq.com

Growing equity, realizing value

Confidential© Equiteq 2016 equiteq.com 2

Equiteq is the leading M&A firm focused exclusively on the consulting sector

What we do for our clients Global presence and consulting industry credentials

Equity value realizationSale to a Strategic Buyer or Financial Investor

Sell50+ Deals

Value creation and sale preparationBetween 1 and 5 years ahead of a desired transaction

Prepare300+

Clients

Why we’re different• Deep domain expertise in the Consulting sector

• Add value and engage at any stage in the exit destination journey

• Unique blend of consulting, corporate finance and investment banking skills

NEW YORK

LONDON

SINGAPORE

Established in 2004 Regular AMCF USA speaker

50 people across 3 continents Regular MCA UK speaker

Clients in 27+ countries Widely published in industry media

SYDNEY

Global Consulting M&A Report 2016

• 9th consecutive year• Over 100,000 downloads to date• Compilation and analysis of all 2015 consulting deals

world-wide• Compiled using:

– Proprietary news feeds– M&A data subscription services– Unique intelligence from our daily interaction with buyers and

sellers– Equiteq commissioned independent research of global

consulting sector buyers

Consulting market segment overview

Global deal activity up by 9.4%

2015 deal volumes

returned to pre-crisis

levels

9.4% growth largely the result of management consulting and media consulting deals

IT deals saw a 3.1% growth from previous year

IT consulting overview

IT consulting – what we analysed

Companies in this sector offer IT consulting, design,implementation and maintenance services at theapplication and infrastructure levels, transcendingenterprise, mobile, social, digital and cloudtechnologies, including:

• IT Strategy and Architecture• IT operating model design• IT sourcing / outsourcing• Enterprise Resource Planning• IT programme & project management• Application design and development• Information security / Cyber• Business Intelligence, Data management & Data

Analytics• System integration• Infrastructure design and implementation

IT consulting deal volume at a 9 year high

Deal values remained consistently high

IT consulting deals involving Social, Mobile, Analytics and Cloud are increasing

Microsoft continues to lead the vendor focus, although SAP gained back positions over Oracle in IT consulting deals

Buyers were dominated by big consultancies

IT outsourcing

Deal volumes fell in 2015 following steady growth since 2012

Deals yielded high revenue multiples and low EBITDA multiples

Buyers are scaling their businesses by acquiring targets with similar capabilities

Big data/data analytics

Varied growth globally, with dips in North America

High revenue and EBITDA multiples

Broad set of buyers including Management, IT consulting and services, Media, Private Equity and Outsourcers

Cyber security

43% increase in deal volume for North America

Revenue and EBITDA multiples at the high end

Cyber security is a top priority for large corporates

Cloud consulting

Steady growth in Europe, fast pace growth in USA

Lower profitability in this space results in higher EBITDA multiples

IT consulting, selective management consulting and media firms tend to target Cloud consulting

Enterprise applications consulting

Decline in deals globally

0.8x revenue multiple is lower than the 6 year median

Buyers place value on companies with clear and strong IP

So what does this mean for IT consulting firm sellers?

2016 consulting M&A outlook

• Q1 2016 deals show no slowdown• Continued optimism in the market but with less

growth than recently• Buyer demand continues to be positive• More sellers are now in the market taking advantage

of the positive deal conditions

The outlook for the IT consulting industry remains strong as firms increase their reliance on novel technological trends such as social media, analytics, mobile and cloud.

2016 high profile M&A hotspots

Big data/ Data

analytics

Cloud consulting

Owners with sale ready firms are well positioned in 2016

Is now the time to prepare for a future sale, or sell your consulting firm?

More resources

A free source of information, advice and insight to help you prepare and sell your consulting firm

Join at equiteq.com/equiteq-edge