Technology & Business Services - G2 Capital...

Strategic Market Insights – Q2 2017 Report

Technology & Business Services

www.g2cap.com 2

IT Consulting – Claiming over seven transactions in the second quarter of 2017 alone, IT

consulting firms continue to draw significant interest from both strategic and financial buyers.

Though primarily project driven, IT consulting business models typically yield higher margins with

managed service offerings such as cybersecurity and cloud services.

Niche Specialty – Not dissimilar to consolidation trends for IT consulting firms, other niche

consulting firms specializing in sectors such as, financial/accounting, risk & advisory, crypto-

currency, litigation, engineering, and environmental have seen an increase in acquisitions as larger

strategic firms such as Huron Consulting, Navigant, FTI Consulting, and CBIZ attempt to acquire

new clientele and service offerings.

G2 Mandates – G2 is currently retained on both sell-side and buy-side capacities for an IT

consulting services provider, financial advisory services provider, energy consultancy, IT

staffing and augmentation provider, and specialty finance and technology consulting firm.

Source: G2 Insights, S&P Capital IQ

G2 Insights – Specialty Consulting

Specialty Consulting, in the form of both IT services and niche professional services encompassing

litigation, financial advisory, and environmental consulting, has seen increased interest from larger

strategic and financial buyers amid industry consolidation to drive inorganic growth.

Technology & Business ServicesG2 Insights – Cloud Services

Source: G2 Insights, Gartner 2017

The cloud services market remains relatively undeveloped and is poised for both growth and

consolidation through 2018. Within the cloud sector, managed service providers (MSPs) are expected

to continue to grow to address hyperscale cloud ecosystems.

Sub-Sector Summary – As MSPs tack on value-added capabilities, cloud infrastructure as a service

(IaaS) offerings have emerged to allow businesses to compute, store, and analyze resources,

complimenting existing platforms as a service (PaaS) providers. This cloud ecosystem often requires

“stickier” contracts from MSPs.

Foundation - Types of IaaS + PaaS providers – Amazon Web Services (AWS), Microsoft Azure,

and Google Cloud Platform (GCP) all provide hyperscale integrated IaaS+PaaS eco systems with

opportunities for third party MSPs to consult and maintain such systems

MSP Opportunity – Cloud MSPs use cloud management platforms (CMPs) to service, automate,

and customize the aforementioned IaaS and PaaS products, differentiating them from data center

outsourcing (DCO) providers

Additional Value-Added Offerings – Outlined by Gartner, Cloud MSPs can ideally provide a

management portal with a cloud service expense management (CSEM) function, qualified technical

support, and professional services with the ability to customize architecture, data migration, and

DevOps automation.

Cloud MSP

Leaders


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Key Trading Statistics

Selected Industry Deals Q2 2017



Sector Summary in Millions USD (converted where necessary)

Data sourced from S&P Capital IQ on June 30, 2017

FY 20171 LTM2

SectorNumber of

Companies

Median Enterprise

Value (MM)

Median

Revenue

Growth

Median

EBITDA

Growth*

EV /

Revenue

EV /

EBITDA

Business Process

Outsourcing16 11,657 8.1% 7.0% 2.5x 13.0x

Human Capital

Management16 931 5.3% 6.0% 0.5x 9.9x

Cloud Software &

Services20 2,432 15.4% 19.8% 5.0x NM

Consulting Services 18 1,059 7.7% 5.7% 1.3x 10.8x

E-Commerce &

Enterprise 21 3,236 11.7% 36.5% 4.8x 17.1x

1 Compared with values at June 30, 20162 LTM Multiples as at June 30, 2016

* YoY growth calculations exclude companies with negative margins in either period

considered.

Several notable transactions have already been completed or announced in the Technology &

Business Services industry through Q2 2017. G2 has outlined select transactions below, followed by

a more comprehensive list on the following tables.

POS Portal acquired by ScanSource,, Inc. (Nasdaq:SCSC) (June 2017) – POS Portal, Inc., a

distributor of point of sales equipment and integration services for warehousing and supply chain

applications, was acquired by ScanSource, a technology distributor with point of sale, barcoding,

networking & security, and hosting services divisions. The transaction size was $158.1MM with

$26.2MM in total earnouts. ScanSource’s acquisition was in line with their corporate development

initiatives as the company looked to growth via organic means augmented by strategic acquisitions.

Xactly Corporation acquired by Vista Equity Partners (May 2017) – Xactly Corporation, a provider of

cloud-based incentive compensation for employees and other performance management services,

was acquired by Vista Equity Partners, a private equity firm focused on middle and upper middle

market investments. The transaction size was $574.8MM at a 5.5x revenue multiple with $34.6MM

in warrants and options. Vista Equity Partners funded the acquisition through their Vista Fund IV, a

$3.5B fund that closed in May of 2012.

SNI Companies acquired by GEE Group Inc. (AMEX:JOB) (April 2017) – SNI Companies, a

professional staffing and recruitment services provider, was acquired by GEE Group Inc. for

$86.0MM. The deal was structured as $44.7MM in cash, $28.8MM in convertible preferred stock,

and $12.5MM of convertible subordinated notes. The deal broadens GEE’s foothold in Iowa,

Louisiana, Minnesota, New Jersey, and Pennsylvania.Source: CRN, S&P Capital IQ

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Technology & Business ServicesSelect M&A Activity – Pending & Closed

Business Process Outsourcing



Date Closed Target Acquirer / InvestorImplied Enterprise

Value (MM)EV / EBITDA EV / Revenue

Pending GC Pivotal LLC GTT Americas, LLC $157.8 - -

Pending TMG Health, Inc.Cognizant Technology

Solutions Corporation- - -

PendingUrban Fulfillment Services,

LLCHCL Technologies Limited - - -

PendingBlue Vase Marketing LLC,

Call Center CapabilitiesGreat Falls Marketing, LLC - - -

Jul-17 Kofax Limited Thoma Bravo, LLC $1,350.0 - 0.3x

Jun-17 Output Services Group, Inc.Aquiline Capital Partners

LLC- - -

May-17

Vertex Business Services,

LLC, BPO And Contact

Center Operations

Faneuil, Inc. $12.7 - -

May-17Paradigm Technology

Consulting, LLC

Geisinger Medical

Management Corporation- NM -

Apr-17 EXCELTO Solutions LLC Trimax Americas - - -

Apr-17 National Legal Services, LLC Ontellus - - -

Apr-17 Connextions, Inc.TeleTech Healthcare

Solutions, Inc.$80.0 - -

Human Capital Management



PendingPeople Store Staffing

Solutions Inc.

Peoplesource Staffing

Solutions, Inc.- - -

Pending RCK, LLC Corps Team Services, LLC - - -

Jul-17 intraFUSION, Inc. McKesson Specialty Health - - -

Jul-17 Advantage RN, LLCCross Country Healthcare,

Inc.$86.8 8.7x 0.9x

Jun-17Virtual Resource

Management Corporation

Industrial Staffing Services,

Inc.- - -

Jun-17 TriCore Solutions, LLC Rackspace Hosting, Inc. - - -

Jun-17 Medical Solutions L.L.C. TPG Growth - - -

May-17 Jibe Consulting, Inc. The Hackett Group, Inc. $20.0 - -

May-17

PrideStaff, Inc., Staffing and

Employment Agency in San

Diego, California

Undisclosed - - -

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Human Capital Management (continued)

Cloud & Software Services

Date Closed Target Acquirer / Investor

Implied

Enterprise

Value (MM)

EV / EBITDA EV / Revenue

Pending West Corporation Apollo Global Management, LLC $4,887.4 7.7x 2.1x

Pending Saggezza Inc. Cisco Systems, Inc. - - -

PendingVerizon Communications Inc., Cloud

and Hosting Service Business

International Business Machines

Corporation- - -

Pending Viptela, Inc. Cisco Systems, Inc. $610.0 - -

Pending Guavus, Inc. Thales S.A. $215.0 - 7.2x

Pending Synchronoss Technologies, Inc. Siris Capital Group, LLC $986.1 18.2x 2.1x

Pending ViaWest, Inc. Peak 10 Holding Corporation $1,675.0 - -

Jul-17 Broadview Networks Holdings, Inc. Windstream Holdings, Inc. $196.1 4.3x 0.7x

Jul-17 Cloudyn Software Ltd.Microsoft Israel Research And

Development (2002) Ltd- - -

Jun-17 Jive Software, Inc. Wave Systems Corp. $343.5 69.1x 1.7x

Jun-17 Quality Technology Solutions, Inc.Axispoint Technology Solutions

Group, Inc.- - -

Jun-17 Riskonnect, Inc.Thoma Bravo, LLC; Thoma

Bravo Discover Fund Partnership- - -

Jun-17 Continuum Managed Services, LLCThoma Bravo, LLC; Thoma

Bravo Discover Fund Partnership- - -

May-17Oracle Corporation, Oracle Analytics

CloudinterRel Consulting Partners, LLP - - -

May-17 OneCloud Consulting Inc. ePlus Technology, inc. $13.3 - -

Apr-17 iDevices, LLC Hubbell Incorporated $60.0 - -

Apr-17 Spanning Cloud Apps, LLC Insight Venture Partners LLC - - -



May-17PrideStaff, Inc., Staffing and

Employment Agency in DallasUndisclosed - - -

May-17Synergy Emergency

Physicians, Inc.Team Health, Inc. - - -

Apr-17 Dahl Consulting, Inc.Doherty Staffing Solutions,

Inc.- - -

Apr-17 EXCELTO Solutions LLC Trimax Americas - - -

Apr-17 Zycron, Inc. BG Staffing, LLC $23.0 - 0.6x

Apr-17 Global HR Research, LLC Renovo Capital, LLC $30.0 - -

Apr-17 entero LLCBucher & Christian

Consulting, Inc.- - -

Apr-17 SNI Companies Inc. Gee Group Inc. $86.0 - 0.8x

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Consulting Services



Pending Legends Hospitality LLC New Mountain Capital, LLC - - -

Pending InfomartMeltwater News Canada

Inc.$38.3 - -

PendingPhase One Consulting Group,

Inc.

Accenture Federal

Services LLC- - -

Jun-17 LabAnswer Government LLC Accenture plc $93 - -

Jun-17 Clarity Consulting, Inc. Perficient, Inc. $9.4 - 0.3x

Jun-17Doman Networking Services

Inc.

Coordinated Business

Systems, Ltd. of Minnesota- - -

Jun-17 The Crypto Company CROE, INC. $25.3 - -

Jun-17 CMF Associates, LLC CBIZ, Inc. - - -

Jun-17 Lux Research, Inc. Bregal Sagemount - - -

Jun-17 Ciber, Inc. HTC Global Ventures, LLC $93 - -

Jun-17Vicenti, Lloyd & Stutzman

LLPCliftonLarsonAllen LLP - - -

Jun-17Ciber, Inc., Substantially All

AssetsHTC Global Ventures, LLC - - -

May-17 Paragon Audit & Consulting BKD, LLP - - -

May-17 McGee Partners, Inc.Vanasse Hangen Brustlin,

Inc.- - -

May-17 Robert Gregory Partners, LLC Franklin Covey Co. $8.0 - -

May-17 The Paciello Group, LLP Freedom Scientific Inc. - NM -

May-17 AIM Consulting Group, LLC Addison Group, LLC - - -

Apr-17Computer Technology

Solutions, Inc.CGI Group Inc. - - -

Apr-17Advanced Technology

Solutions, Inc.

IMAGINiT Technologies

Inc.- - -

Apr-17 ADI Strategies, Inc.Huron Consulting Group

Inc.- - -

www.g2cap.com 7




E-Commerce & Enterprise



Pending LLamasoft, Inc. TPG Capital, L.P. - - -

Pending ECommerce Systems, Inc. CGI Group Inc. - - -

Pending Wavefront, Inc. VMware, Inc. - - -

Pending GENBAND US LLC Sonus Networks, Inc. $338.5 14.3x 0.8x

Pending Erecruit Holdings, LLCBond International

Software plc- - -

Pending Mercury Network, LLC CoreLogic, Inc. - - -

Pending TeleSign CorporationBelgacom International

Carrier Services SA$230.0 - 2.3x

Pending Angie's List, Inc. HomeAdvisor, Inc. $566.8 NM 1.9x

Jul-17 Covisint Corporation Open Text Corporation $69.2 NM 1.0x

Jul-17 Xactly Corporation

Vista Equity Partners LLC;

Vista Equity Partners Fund

VI, L.P.

$530.6 NM 5.5x

Jun-17FMT Consultants, LLC, SAP

Business ByDesignVistaVu Solutions Ltd. - - -

Jun-17 TradeMotion, LLCThe Reynolds and

Reynolds Company- - -

Jun-17 FDM Software Ltd. Aptean, Inc. - - -

Jun-17 SolutionsIQ, Inc. Accenture plc - - -

Jun-17 Pipeline Group, Inc.Prometheus Group

Enterprises, LLC- - -

May-17 Kony, Inc.Diebold Nixdorf,

Incorporated- - -

May-17 Lochbridge, Inc. Digital Management, Inc. - - -

May-17 HubLogix, Inc.ChannelAdvisor

Corporation- - -

May-17 Tomont Solutions Inc. KPMG LLP (Canada) - - -

May-17 Apprise Software, Inc. Aptean, Inc. - - -

Apr-17 PayVisors LLC Zift LLC - - -

Apr-17 Govenda, LLCDigital Evolution Group

LLC- - -

Apr-17 Echo Cloud Solutions, LLC Online Tech, Inc. - - -

Apr-17 Mainstream Software Inc. CBRE Group, Inc. - - -

www.g2cap.com 8

Technology & Business ServicesPublic Trading Metrics – Business Process Outsourcing


Charts show average daily multiples for each year


IndustryEnterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDA

EBITDA

MarginLT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Mean15,615 15,130 925 5,190 1,112 17.5% 1,780 1.9x 2.5x 12.5x

Median11,657 10,814 614 3,107 638 19.7% 747 1.6x 2.5x 13.0x

Company Ticker

Size (Millions USD)

EBITDA

Margin

Leverage Valuation

Enterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDALT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Automatic Data Processing,

Inc.NASDAQGS:ADP 44,853 45,842 2,780 12,380 2,722 22.0% 2,002 0.7x 3.6x 16.5x

Cognizant Technology

Solutions CorporationNasdaqGS:CTSH 36,044 39,109 1,157 14,131 2,775 19.6% 747 0.3x 2.6x 13.0x

Convergys Corporation NYSE:CVG 2,394 2,238 177 2,919 367 12.6% 343 0.9x 0.8x 6.5x

Equifax Inc. NYSE: EFX 19,129 16,519 404 3,294 1,220 37.0% 2,038 1.7x NM 15.7x

ExlService Holdings, Inc. NasdaqGS:EXLS 1,699 1,872 89 721 101 14.0% 35 0.3x 2.4x 16.8x

DXC Technology Company NYSE:DXC 23,817 21,838 1,263 7,607 640 8.4% 2,159 3.4x 3.1x NM

Fidelity National Information

Services, Inc.NYSE:FIS 37,144 28,232 786 9,351 2,499 26.7% 9,415 3.8x 4.0x 14.9x

Genpact Limited NYSE:G 6,069 5,364 441 2,624 427 16.3% 1,026 2.4x 2.3x 14.2x

Global Payments Inc. NYSE:GPN 17,335 13,772 1,081 4,189 1,148 27.4% 4,175 3.6x 4.1x 15.1x

Infosys Limited NSEI:INFY 28,048 33,089 3,579 10,358 2,811 27.1% NA NA 2.7x 10.0x

Sykes Enterprises,

IncorporatedNasdaqGS:SYKE 1,390 1,410 287 1,523 172 11.3% 267 1.6x 0.9x 8.1x

TeleTech Holdings, Inc. NasdaqGS:TTEC 1,984 1,861 66 1,301 163 12.6% 182 1.1x 1.5x 12.1x

West Corporation NasdaqGS:WSTC 4,968 1,986 192 2,286 636 27.8% 3,065 4.8x 2.2x 7.8x

Wipro Limited BSE:507685 16,281 19,373 840 8,521 1,691 19.8% 503 0.3x 1.9x 9.6x

Wirecard AG XTRA:WDI 7,033 7,855 1,551 1,204 335 27.8% 659 2.0x NM NM

WNS (Holdings) Limited NYSE:WNS 1,653 1,718 105 635 86 13.6% 89 1.0x 2.6x NM

11.8x10.9x

8.9x

10.8x11.1x

9.9x

11.1x

10.7x

12.2x

12.7x12.5x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

EV

/ E

BIT

DA

S&P 500

2.7x

2.3x

1.9x

3.0x

2.4x2.1x

2.4x2.6x

2.9x

2.5x2.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

EV

/ R

EV

EN

UE

S&P 500

www.g2cap.com 9

Technology & Business ServicesPublic Trading Metrics – Human Capital Management




IndustryEnterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDA

EBITDA

MarginLT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Mean 3,195 3,022 196 6,143 336 5.0% 426 1.0x 0.5x 9.0x

Median 931 928 23 2,003 113 4.9% 104 0.8x 0.5x 9.3x

Company Ticker

Size (Millions USD)

EBITDA

Margin

Leverage Valuation

Enterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDALT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Adecco Group AG SWX:ADEN 13,885 12,957 1,270 24,707 1,305 5.3% 1,787 1.4x 0.6x 10.6x

Barrett Business Services,

Inc.NASDAQ:BBSI 401 415 18 860 28 3.2% NA NA 0.5x 14.5x

BG Staffing, Inc. AMEX:BGSF 172 152 0 257 22 8.7% 39 1.7x 0.7x 7.6x

CDI Corp. NYSE:CDI 117 109 7 818 (8) -1.0% NA NA 0.1x NM

Computer Task Group,

IncorporatedNASDAQ:CTG 77 87 12 308 6 1.9% 3 0.5x 0.2x 13.1x

Hays plc LSE:HAS 3,049 3,111 141 5,768 379 6.6% 80 0.2x 0.5x 8.1x

Hudson Global, Inc NASDAQ:HSON 39 42 15 425 4 0.9% NA NA 0.1x 9.8x

Kelly Services, Inc. NASDAQ:KELY.A 813 859 46 5,217 92 1.8% NA NA 0.2x 8.9x

Kforce Inc. NASDAQ:KFRC 628 495 4 1,337 74 5.5% 128 1.7x 0.5x 8.5x

ManpowerGroup Inc. NYSE:MAN 7,685 7,489 573 19,976 853 4.3% 455 0.5x 0.4x 9.0x

On Assignment, Inc. NYSE:ASGN 3,453 2,860 19 2,530 265 10.5% 580 2.2x 1.4x 13.0x

PageGroup plc LSE:PAGE 1,790 1,911 115 1,477 134 9.1% NA NA 1.2x 13.3x

Randstad Holding NV ENXTAM:RAND 11,985 10,688 374 25,439 1,138 4.5% 1,135 1.0x 0.5x 10.5x

Robert Half International Inc. NYSE:RHI 5,836 6,096 298 5,199 592 11.4% 1 0.0x 1.1x 9.9x

TrueBlue, Inc. NYSE:TBI 1,050 996 26 2,673 143 5.3% 55 0.4x 0.4x 7.4x

Volt Information Sciences,

Inc.AMEX:VISI 149 83 21 1,288 6 0.4% NA NA 0.1x NM

0.7x

0.4x0.3x

0.5x0.5x0.5x0.6x0.6x0.6x

0.5x0.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

EV

/ R

EV

EN

UE

S&P 5009.9x

5.4x6.7x

11.6x10.7x

8.7x

10.9x

11.1x

10.4x

8.9x 9.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

EV

/ E

BIT

DA

S&P 500

www.g2cap.com 10

Technology & Business ServicesPublic Trading Metrics – Cloud Software & Services




IndustryEnterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDA

EBITDA

MarginLT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Mean 41,159 44,768 1,240 8,502 4,610 17.6% 8,348 2.7x 4.2x 13.4x

Median 2,432 2,692 156 461 31 3.5% 674 1.2x 4.7x 12.2x

Company Ticker

Size (Millions USD)EBITDA

Margin

Leverage Valuation

Enterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDALT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Adobe Systems Incorporated NASDAQ:ADBE 66,744 69,787 1,317 6,526 2,141 32.8% 1,888 0.9x NM NM

Aerohive Networks, Inc. NYSE:HIVE 209 264 35 161 (24) -14.8% 20 -0.8x 1.3x -8.8x

Akamai Technologies, Inc. NASDAQ:AKAM 8,411 8,611 353 2,418 691 28.6% 651 0.9x 3.5x 12.2x

Amber Road, Inc. NYSE:AMBR 240 232 11 76 (11) -14.2% 19 -1.8x 3.1x NM

athenahealth, Inc. NASDAQ:ATHN 5,784 5,599 71 1,151 128 11.1% 264 2.1x 5.0x NM

Box, Inc. NYSE:BOX 2,362 2,465 184 426 (117) -27.4% 40 -0.3x 5.5x NM

Cisco Systems, Inc. NASDAQ:CSCO 120,998 156,502 8,116 48,510 15,048 31.0% 28,222 1.9x 2.5x 8.0x

Citrix Systems, Inc. NASDAQ:CTXS 12,072 12,028 845 3,441 987 28.7% 1,367 1.4x 3.5x 12.2x

Cogint, Inc. NASDAQ:COGT 318 277 22 198 (14) -7.1% 60 -4.3x 1.6x NM

Cornerstone OnDemand, Inc. NasdaqGS:CSOD 1,982 2,031 107 445 (45) -10.2% NA NA 4.5x NM

Instructure, Inc. NYSE:INST 815 853 26 134 (47) -35.4% NA NA 6.1x NM

Microsoft Corporation NasdaqGS:MSFT 496,594 532,175 7,663 89,950 30,432 33.8% 76,073 2.5x 5.5x 16.3x

Qualys, Inc. NasdaqGS:QLYS 1,266 1,511 131 212 52 24.8% NA NA 6.0x NM

Salesforce.com, inc. NYSE:CRM 60,918 61,602 2,025 8,863 449 5.1% 696 1.6x 6.9x NM

ServiceNow, Inc. NYSE:NOW 17,548 18,007 1,173 1,632 (32) -2.0% 1,140 -35.4x NM NM

Symantec Corporation NASDAQ:SYMC 21,113 17,183 2,306 4,310 714 16.6% 6,202 8.7x 4.9x NM

Synchronoss Technologies,

Inc.NASDAQ:SNCR 887 763 181 477 54 11.4% 226 4.2x 1.9x 16.3x

Twilio Inc. NYSE:TWLO 2,345 2,634 118 305 (41) -13.3% NA NA 7.7x NM

Wayside Technology Group,

Inc.NASDAQ:WSTG 77 88 10 435 9 2.0% NA NA 0.2x 8.7x

Zendesk, Inc. NYSE:ZEN 2,501 2,749 103 364 (84) -23.0% NA NA 6.9x NM

5.7x

4.3x

3.3x

4.4x4.3x

3.9x4.2x

4.4x4.7x

4.5x4.2x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

EV

/ R

EV

EN

UE

S&P 500

13.9x

11.1x

9.7x

12.8x

10.6x10.8x

12.2x

10.3x

10.4x

11.1x

13.4x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

EV

/ E

BIT

DA

S&P 500

www.g2cap.com 11

Technology & Business ServicesPublic Trading Metrics – Consulting Services




IndustryEnterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDA

EBITDA

MarginLT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Mean 6,204 6,077 325 3,529 512 10.1% 489 1.9x 1.5x 12.0x

Median 1,059 844 30 658 82 10.9% 135 1.7x 1.3x 10.8x

Company Ticker

Size (Millions USD)

EBITDA

Margin

Leverage Valuation

Enterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDALT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Accenture plc NYSE:ACN 73,785 76,433 3,382 34,189 5,804 17.0% 25 0.0x 2.2x 12.7x

Booz Allen Hamilton Holding

CorporationNYSE:BAH 6,273 4,828 337 5,875 559 9.5% 1,799 3.2x 1.1x 11.2x

Capgemini SE ENXTPA:CAP 18,722 16,916 1,505 14,483 1,843 12.7% 3,695 2.0x 1.3x 10.2x

CBIZ, Inc. NYSE:CBZ 1,014 803 1 831 92 11.0% 211 2.3x 1.2x 11.1x

CRA International, Inc. NasdaqGS:CRAI 296 311 22 332 27 8.3% NA NA 0.9x 10.8x

Ecology & Environment, Inc. NasdaqGM:EEI 44 54 11 101 6 5.6% 0 0.0x 0.4x 7.7x

Exponent, Inc. NasdaqGS:EXPO 1,353 1,508 90 312 72 23.1% NA NA 4.3x NM

Franklin Covey Co. NYSE:FC 298 267 8 191 7 3.8% 32 4.5x 1.6x NM

FTI Consulting, Inc. NYSE:FCN 1,610 1,328 139 1,771 149 8.4% 481 3.2x 0.9x 10.8x

Huron Consulting Group Inc. Nasdaq: HURN 1,327 918 14 732 112 15.3% 400 3.6x 1.8x 11.8x

ICF International, Inc. NASDAQ:ICFI 1,153 885 9 1,199 115 9.6% 278 2.4x 1.0x 10.0x

Navigant Consulting, Inc. NYSE:NCI 1,103 934 7 948 131 13.8% 185 1.4x 1.2x 8.4x

NV5 Global, Inc. NasdaqCM:NVEE 447 450 34 243 26 10.9% 21 0.8x 1.8x 16.9x

Resources Connection, Inc. NasdaqGS:RECN 410 406 62 583 42 7.2% 48 1.1x 0.7x 9.8x

Ricardo plc LSE:RCDO 597 536 35 422 58 13.8% 86 1.5x 1.4x 10.2x

The Advisory Board Company Nasdaq: ABCO 2,544 2,090 150 797 118 14.8% 549 4.6x 3.2x NM

The Hackett Group, Inc. NasdaqGS:HCKT 445 453 17 263 40 15.3% 9 0.2x 1.7x 11.0x

Willdan Group, Inc. Nasdaq: WLDN 249 263 26 256 16 6.2% 2 0.1x 1.0x 15.7x

9.9x

8.7x

7.6x

8.4x 8.4x

7.4x8.2x

10.0x10.9x

10.9x12.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

EV

/ E

BIT

DA

S&P 500

1.3x

1.2x

0.9x1.0x

1.1x1.1x

1.2x1.3x

1.5x 1.4x

1.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

EV

/ R

EV

EN

UE

S&P 500

www.g2cap.com 12

Technology & Business ServicesPublic Trading Metrics – E-Commerce & Enterprise Software




IndustryEnterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDA

EBITDA

MarginLT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

Mean 54,218 53,884 2,692 12,579 4,081 21.9% 12,789 4.3x 4.0x 16.0x

Median 3,236 2,816 132 597 124 23.2% 1,155 2.3x 4.6x 16.5x

Company Ticker

Size (Millions USD)EBITDA

Margin

Leverage Valuation

Enterprise

Value

Market

CapCash

LTM

Revenue

LTM

EBITDALT Debt

LT Debt /

EBITDA

EV / LTM

Revenue

EV / LTM

EBITDA

American Software, Inc.NASDAQ:AMSW.

A218 303 66 106 10 9.7% NA NA 2.1x 21.2x

ARI Network Services, Inc. NASDAQ:ARIS 129 119 6 51 7 12.8% 13 1.9x 2.5x 19.7x

BlackBerry Limited TSX:BB 3,838 5,295 933 1,144 124 10.8% 809 6.5x 3.4x NM

Ebix, Inc. NASDAQ:EBIX 1,898 1,700 120 306 111 36.3% 297 2.7x 6.2x 17.1x

First Data Corporation NYSE:FDC 37,834 16,727 0 7,960 2,780 34.9% NA NA 4.8x 13.6x

Global Payments Inc. NYSE:GPN 17,335 13,772 1,081 4,189 1,148 27.4% 4,175 3.6x 4.1x 15.1x

International Business

Machines CorporationNYSE:IBM 176,735 144,523 11,696 78,439 17,194 21.9% 37,615 2.2x 2.3x 10.3x

Intuit Inc. NASDAQ:INTU 32,935 34,028 1,350 5,089 1,580 31.0% 450 0.3x 6.5x 20.8x

Kinaxis Inc. TSX:KXS 1,426 1,571 142 121 20 16.7% NA NA NM NM

Manhattan Associates, Inc. NASDAQ:MANH 3,236 3,337 77 597 202 33.8% NA NA 5.4x 16.0x

Microsoft Corporation NASDAQ:MSFT 496,594 532,175 7,663 89,950 30,432 33.8% 76,073 2.5x 5.5x 16.3x

MobileIron, Inc. NASDAQ:MOBL 467 558 86 172 (50) -29.2% NA NA 2.7x NM

ModusLink Global Solutions,

Inc.NASDAQ:MLNK 29 94 112 438 (11) -2.5% 59 -5.3x 0.1x -2.7x

Oracle Corporation NYSE:ORCL 199,630 207,413 21,784 37,728 14,669 38.9% 48,112 3.3x 5.3x 13.6x

Park City Group, Inc. NASDAQ:PCYG 226 236 14 18 4 23.2% 1 0.1x NM NM

Pitney Bowes Inc. NYSE:PBI 5,318 2,816 841 3,384 714 21.1% 2,543 3.6x 1.6x 7.4x

SAP SE NYSE:SAP 126,476 125,588 4,833 26,428 6,585 24.9% 7,102 1.1x 4.8x 19.2x

Sophos Group plc LSE:SOPH 2,942 2,654 68 530 11 2.0% 296 27.9x 5.6x NM

SPS Commerce, Inc. NASDAQ:SPSC 942 1,096 132 207 23 11.1% NA NA 4.6x NM

The Descartes Systems Group

IncTSX:DSG 1,787 1,844 54 209 70 33.5% NA NA 8.5x 25.5x

VMware, Inc. NYSE:VMW 28,595 35,707 2,790 7,093 1,850 26.1% 1,500 0.8x 4.0x 15.5x

12.6x

9.5x

8.7x

9.6x9.3x

9.8x10.9x

12.5x13.4x

14.9x

16.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

EV

/ E

BIT

DA

S&P 500

3.4x3.2x

2.7x

2.8x2.7x

3.1x

3.5x3.7x

4.1x 4.0x 4.0x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

EV

/ R

EV

EN

UE

S&P 500

www.g2cap.com 13

Economic & Industry Trends

Last 5 Year EV / EBITDA Trend by Industry


Data sourced through S&P Capital IQ on June 30, 2017

Data sourced through S&P Capital IQ on June 30, 2017

% Change in Personal DPI

0.0x

5.0x

10.0x

15.0x

20.0x

Q1 '12 Q3 '12 Q1 '13 Q3 '13 Q1 '14 Q3 '14 Q1 '15 Q3 '15 Q1 '16 Q3 '16 Q1 '17

EV

/ E

BIT

DA

^SPX BPO Business & Human Resources

Consulting Services Cloud E-Commerce & Enterprise

200

205

210

215

220

225

230

235

240

245

250

Q1 '07 Q1' 08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1' 17

Index 1

982-1

984=

100

www.g2cap.com 14

Technology & Business ServicesM&A Activity – Middle Market

M&A transaction multiples are the median North American M&A activity independent of target / acquirer industry and enterprise

value. The dataset has been restricted to multiples between 0.0x and 30.0x EBITDA; sourced through Pitchbook’s Q2 2017 Report.

M&A Transaction Multiples

M&A Activity by Acquirer Type

Data sourced through PitchBook Q2 2017 Report

Acquisitions across the Middle Market have fallen, similar to Q3 2016 numbers. Though deal volume

has decreased, deal valuations have steadily increased over the last three years, chiefly due to the

abundance of cheap debt.

1,2

72

1,1

49

1,1

13

1,4

28

1,1

21

1,1

29

1,2

29

1,3

09

1,4

34

1,4

07

1,4

95

1,4

47

1,5

66

1,4

95

1,4

94

1,5

30

1,3

85

1,3

50

976

1,5

33

1,3

85

1,0

56

3,4

35

3,3

38

3,3

17

3,6

46

3,4

72

3,2

78

3,4

19

3,5

02

4,1

22

4,2

07

3,8

20

3,6

41

4,3

90

4,1

54

4,4

05

4,2

83

4,0

87

3,1

65

2,1

58

3,6

90

4,0

87

2,4

82

0%

5%

10%

15%

20%

25%

30%

35%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2012 2013 2014 2015 2016 2017

% S

ponsor-

Backed

To

tal D

eal C

ount

Sponsor-Backed Corporate M&A % Sponsor-Backed

4.5

x

4.1

x

4.0

x

4.6

x

5.0

x

4.9

x

4.2

x

4.9

x

4.4

x

4.8

x

5.0

x

5.4

x

4.2

x

4.5

x

4.8

x

5.0

x

4.8

x 5.9

x

2.8

x

2.7

x

3.2

x 3.5

x 3.7

x

3.0

x

4.3

x 3.8

x

4.4

x

3.6

x 4.1

x

3.8

x

4.2

x 4.7

x

4.7

x

4.8

x

3.6

x

4.1

x

0x

2x

4x

6x

8x

10x

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2013 2014 2015 2016 2017

Multip

les o

f E

BIT

DA

Debt / EBITDA Equity / EBITDA

www.g2cap.com 15

Selected Ongoing G2 Projects

Technology & Business ServicesSelected Q2 Transaction Highlight

Project Rover

Sell-Side

Human Capital Management

Project Rover – G2 is currently advising a leading IT

staffing and service provider based in North America on a

sell-side process. The company also offers IT,

engineering, life sciences staff augmentation, payroll,

high hazard payroll and 1099 compliance services. Prior

to G2’s sell-side mandate, the Client retained G2 as a

buy-side advisor and successfully executed a bolt-on

acquisition in 2017.

Project Bot

Buy-Side

E-Commerce Fulfillment

Project Bot – G2 is currently advising an advanced, AMR,

E-commerce fulfillment and logistics provider in a buy-

side process. Search criteria includes:

Core Services: Fulfillment & distribution, pick-

pack-ship services, warehousing services

Value-Added Services: Freight, and billing

management, EDI/Integration, Customer Care

G2 Capital Advisors acted as the exclusive Financial Advisor to:

in its divestiture of: to:

G2 successfully advised the carve out of a business process outsourcing / contact center services

from its corporate parent.

Client – Integrated Distribution and Logistics Direct, LLC, dba SP Express, a Third-Party Logistics

service provider, sought to divest TMP Direct, LLC, a value-add customer contact center. For over 26

years, TMP Direct has assisted clients with acquiring and retaining customers through its fully integrated

solutions. Located in New Jersey, TMP Direct and its team act as an extension to their clients’ team,

building relationships with client customers and prospects across a broad set of industries, and with a

differentiated focus on high-touch, top tier brands.

Situation – SP Express is jointly owned by management and Cadre Partners, a management advisory

and investment firm based in Arizona. Management completed a strategic assessment in the summer of

2016 and decided to divest the non-core business and focus solely on its core e-commerce and Third-

Party Logistics offerings.

Engagement – G2 Capital Advisors was engaged by SP Express to run a targeted, highly involved sales

process to a select set of strategic and financial buyers. G2 worked closely with TMP Direct’s existing

management team, SP Express, and prospective buyers to structure and execute the carve-out

transaction in an efficient and expedited manner.

Outcome – The transaction was successfully consummated through a sale to Vertex Altruist Group Co.,

a leading, privately held Business Process Outsourcing, Customer Management Outsourcing and IT

Services company based in India, with over 12,000 employees and 12 office locations

Source: G2 Insights

Source: G2 Insights


www.g2cap.com 16

G2 Capital Advisors is pleased to present its Technology & Business Services industry update for Q2 2017,

providing commentary and analysis on M&A and market trends within the Technology & Business Services

industry. We hope you find this report helpful and encourage you to contact us directly if you would like to

discuss our perspective on the current market environment, trends, or our relevant industry experience.

G2 OverviewInvestment Banking and Restructuring Advisory

THIRTY-FIVE professionals

across SIX offices

FOUR Industry Practice Groups

Transportation & Logistics / Supply Chain

Industrials / Manufacturing

Technology / Business Services

Aerospace & Defense / Security

FIVE Service Offerings

Securities

Sell-Side

Buy-Side

Operational

Restructuring

Financial

Restructuring

G2 Capital Advisors offers an integrated and complementary set of financial and corporate advisory

services to assist our clients through the lifecycle of a business.

G2 is focused in four sectors; each practice group headed by a leader with 20+ years of C-level operating

experience. G2’s managing directors have navigated all stages of the corporate lifecycle, from growth to

maturity, and apply that experience to provide advisory services to our clients.

Sector-Focused; Experience-Based

Transportation &

Logistics / Supply Chain

Industrials /

Manufacturing

Technology /

Business Services

Aerospace & Defense /

Security

Led by Ron Lentz Led by Jack Shields Led by Matt Konkle Led by Bob Kinder

Freight Forwarding

Trucking / Final Mile

Warehousing / Distribution

Third Party Logistics (3PL)

e-Commerce Fulfillment

Manufacturing / Distribution

Flooring

Plastics / Packaging

Consumer Products

Metals

Tech-enabled Services

BPO

Managed Services

Internet & Digital Media

Business Services

Cyber Security

Defense Robotics

UAV, C4ISR, Hardware

Aerospace Electronics

Aerospace Components

G2 Overview

www.g2cap.com 17

Company Title Role

Chairman

Full service third party logistics (3PL) company in North

America specializing in value-add warehousing and

distribution, brokerage and transportation. Led the

divestiture of non-core business units and revitalization

strategy of the company

COO

Led the reorganization of the company’s e-Commerce

fulfillment, customer care and supply chain services

business units following the acquisition of Fifth Gear.

President

End-to-end e-Commerce services company specializing

in complex order fulfillment and BPO. Led the go-to-

market strategy and growth of the business before selling

for $65 million or 15x earnings.

President

Enterprise software company specializing in order

management technology for direct-to-consumer retailers.

Transformed the business through multiple acquisitions

and launch of offshore operations in India.

CFO

Pioneer in early warning notification software and services

for Public Safety industry. Led the sale of the company to

Golden Gate Capital for 3x trailing twelve month revenue.

Matt Konkle brings 20+ years of C-level operating experience to G2’s Technology & Business Services

practice group. Deep industry background in e-Commerce, supply chain and logistics, enterprise software,

and business services, with operational expertise in tech-enabled services, business process outsourcing

and managed services.

Matt KonklePractice Leader

Technology &

Business Services

G2 OverviewMatt Konkle, Managing Director

www.g2cap.com 18

ReferenceContact & Glossary of Terms

For more information about G2, please visit: www.g2cap.com

Our corporate headquarters is located at: 535 Boylston Street, 11th Floor, Boston, MA 02116

Boston | Chicago | Indianapolis | Los Angeles | Naples | San Francisco

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.

Term Definition

Revenue

Total revenue from the sale of goods and services rendered during the reporting period, in normal course of

business, reduced by sales returns and allowances, and sales discounts. For banks, this item is defined as net

interest income after loan loss provisions

EBITDAEarnings before interest, taxes, depreciation, and amortization. Calculated as Revenue – Expenses, excluding

interest, taxes, depreciation and amortization

Market CapMarket value of a company using most recently reported basic weighted average shares outstanding.

Calculated as Market Price (as of period end) * Basic Weighted Average Shares Outstanding

Long-Term DebtSum of the carrying values as of the balance sheet date of long-term debt with a maturity beyond one year or

the normal operating cycle, if longer

Net DebtNet Debt shows the company’s overall debt situation by netting the value of debts with cash and other similar

liquid assets. Calculated as Total Debt – Cash & Cash Equivalents and Short Term Investments

Enterprise Value

Enterprise Value represents the combined economic value of a company as of the most recent fiscal year end.

Calculated as Diluted Market Capitalization + Total Debt + Minority Interest + Preferred Stock – Cash and Short

Term investments

P/EA valuation ratio of a company stock price compared to its per share earnings. Calculated as Market Price /

Earnings per Share for the last annual period

Tangible Book Value Total Shareholder’s Equity – Goodwill and Intangible Assets

Matt Konkle, Managing Director Jeffrey Unger, CEO

[email protected] [email protected]

317.371.6608 617.918.7929

Victoria Arrigoni, Director

[email protected]

617.918.7934

Theodore Bang, Analyst

[email protected]

617.610.0918

mailto:[email protected]




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