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1、1|12 IT&Business Services M&A Overview 1H 2022CIOs continued reliance on IT Services drives momentum in sectorservice firms,while critical strategy work,whichrequireshigh-endskillsunobtainablebymanyenterprises,will increasingly be fulfilled by externalconsultants.UnabatedgrowthWhile central banks ar
2、ound the world are focusing onfighting inflation,the current levels of volatility are notexpected to deter CIOs investment plans for 2022 especially when it comes to spending on IT&BusinessServices.In fact,in its July 2022 forecast,Gartner projected thatworldwide IT spending would reach$4.5 trillion
3、 in2022 an increase of 3%from 2021.For many enterprises,price increases and deliveryuncertainty,exacerbated by armed conflict in Ukraine,have accelerated the transition from IT ownership toIT service sourcing.This led cloud spending to grow18.4%in 2021,and it is expected to grow 22.1%in2022.Secondly
4、,the IT skills shortage means CIOs are forcedto take action to balance increased IT demand anddwindling IT staffing levels.For technology providers,this includes increasing prices on software and servicestoallowforcompetitivesalariesandimproveemployee acquisition and retention.This is driving an inc
5、rease in spending in software andservices,with worldwide software spending expectedto grow 9.6%to$807 billion in 2022 and globalspending on IT services,specifically,forecast to reach$1.3 trillion.In parallel,CIOs are using more IT services to helpmanage the lack of skilled IT staff.Tasks that requir
6、elower skill sets tend to be outsourced to managed.drivingM&Ain thesectorAt present,IT Services firms garnering M&A interestare tech consultancies and system integrators withexpertise in supply chain modernisation,cybersecurityintegration,and ESG data consulting.Supply chains:Major peaks and troughs
7、 in demandhave posed a challenge to the robustness of supplychain systems in place,increasing the need for betterintegration systems.Cybersecurity:In addition,firms of all sizes areinvesting in cybersecurity services as cyberattacksbecome more complex and pose a serious threat.With the introduction
8、of hybrid working models,around 26%of executives say they have seen anincrease in the severity,volume,and scope of cyberattacks.Similarly,as remote working opportunitiesevolve,61%of employers have expressed concernaboutattackstargetingunprotectedremoteemployees.ESG:As ESG requirements become the nor
9、m,there isan urgent need for companies to use software orservices to support the real-time recording,analysis,reporting and visibility of their ESG data.Many aretherefore turning to ESG IT consultancies to facilitatethis process.2|12 IT&Business Services M&A Overview 1H 2022The above graph covers th
10、e period between January 2017 and June 2022.Throughout this M&A report,median“trailing 30-month”multiples plotted in the graphs refer to the 30-month periodprior to and including the half year.Total number of deals&valuation multiples in IT&Business Services.whilevaluationsremainfairlystaticIn 1H202
11、2,the trailing 30-month medianEBITDA multiple stayed steady at 9.4x,whilethetrailing30-monthrevenuemultiple inched upwards to reach 1.3x.However,these values only depict a mid-point amongst a broader range anddependonamultitudeoffactors,including growth rates,profit margins,geography and domain expe
12、rtise.While the trailing 30-month median revenue multiple came in at 1.3x,50%of all deals were in the 0.5x to 2.1xwith a minimum of 0.1x and a maximum paid out revenue multiple being 20.1x.The trailing 30-month medianEBITDA multiple stood at 9.4x,with 50%of all deals in the 5.9x to 12.3x range.More
13、dramatically,the minimumEBITDA multiple paid out was 1.1x,while the maximum was 44.3x.1.1x1.1x1.2x1.2x1.2x1.2x1.2x1.1x1.2x1.2x1.3x9.9x10.9x10.6x910.2x9.1x9.0 x8.6x8.9x9.4x9.4x-100 200 300 400 500 600 700 8001H 20172H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20212H 20211H 20220 x1x2x3x4x5x6x
14、Trailing 30-monthrevenue multiple2.1x0.6x0 x5x10 x15x20 x Trailing 30-monthEBITDA multipleM&A summaryTransactionvolumesuper growthcontinues.Transaction volume in the IT&Business Servicessector reached 699 deals in 1H2022.This representsrecord level activity in the space:in fact,it is a.31%increase o
15、ver 2H2021,and a whopping 92%increase YoY from 1H 2021.1.3x20.1x0.1x12.3x5.9x9.4x44.3x1.1x3|12 IT&Business Services M&A Overview 1H 202234%66%0.0 x2.0 x4.0 x6.0 x8.0 x10.0 x12.0 x14.0 x1H 20172H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20212H 20211H 20220.0 x0.5x1.0 x1.5x2.0 x2.5x3.0 x1H 201
16、72H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20212H 20211H 202211.7x7.2x1.7x1.0 xProportion of deals by acquirer type,2019-2021StrategicFinancialTrailing 30-month median revenue multiple by acquirer type by half-year,2017-2022StrategicFinancialTrailing 30-month median EBITDA multiples by acq
17、uirer type by half-year,2017-2022StrategicFinancialAnalysis:Strategic vs.Private Equity BuyersContinuedinterestfromprivateequityFinancial buyers have shown consistent interest in theIT&Business Services sector,accounting for over athird of all transactions in the past 30 months.Meanwhile,the first h
18、alf of 2022 saw substantialimprovement in the multiples paid out by privateequitybuyers.Thetrailing30-monthmedianEV/EBITDA multiple for deals involving a financialbuyer reached 11.7x this half year,compared to 10.3xin 2H2021.Though revenue multiples paid out by strategic andfinancial buyers seemed t
19、o converge in previousperiods,the divergence has reappeared this year,withthe trailing 30-month median reaching 1.7x forfinancial buyers and 1.0 x for strategic players.4|12 IT&Business Services M&A Overview 1H 2022AcquirersAcquisitionsin 30 monthsThree most recent acquisitions81XtremeEDAXtremeEDA C
20、orporation Corporation semiconductor design&functional verification servicesAsyscoAsyscoSpftwareSpftware BV BV legacy transformation servicesAdvocate networks LLC Advocate networks LLC IT consulting&managed services15DevbridgeDevbridge Inc.Inc.software development servicesHUNTER Technical Resources
21、LLC HUNTER Technical Resources LLC IT staffing&recruitment servicesLiniumLiniumLLC LLC IT services&BPO15PC Specialists Inc.PC Specialists Inc.IT systems integration&consulting servicesCreative Breakthroughs Inc.Creative Breakthroughs Inc.security integration services InterdynamixInterdynamixSystems
22、Corp.Systems Corp.systems integrator14AE Cloud Consultants Ltd.AE Cloud Consultants LSuite-based systems integration&IT servicesIntegrated Enterprise Solutions Ltd.Integrated Enterprise Solutions Ltd.IT consulting&outsourcing servicesIntellifyIntellifyPty.LtdPty.Ltd AWS&Databricks-based IT consultin
23、g services10KnightecKnightecAB AB IT,design&digitalisation servicesCloudreachCloudreachBlackstone Blackstone Cloud computing systems integration servicesAppCentricaAppCentricaInc.Inc.IT&management consulting services9RizingRizingLLC One Equity Partners LLC LLC One Equity Partners LLC SAP systems int
24、egration&consultingConvergence Acceleration Solutions LLC Convergence Acceleration Solutions LLC IT consulting&program management servicesEdgileEdgile Inc.Inc.Security integration&consulting services97Summits LLC 7Summits LLC Salesforce based CRM consultancyBluetabBluetabSolutions Group S.L.Solution
25、s Group S.L.Data Consulting SoftwareBoxBoatBoxBoatTechnologies LLC Technologies LLC IT&DevOps services8ThirdwareThirdwareSolution Limited Solution Limited IT consulting servicesCom Tec Co IT Ltd.Com Tec Co IT Ltd.insurance IT services ActivusActivus Connect LLC Connect LLC outsourced call centre ser
26、vices 8Enterprise Security Solutions LLC aka ESS Enterprise Security Solutions LLC aka ESS security systems integration servicesSystems Electronics Inc.Systems Electronics Inc.systems integration servicesStructure Works Inc.Structure Works Inc.security integration servicesTopacquirercontinuesto dive
27、rsifyofferingThe sectors largest acquirer Accenture has keptits top position,with 10 further IT&Business Servicesacquisitions completed in 1H2022.Accenture hascontinued its acquisition spree in the sustainabilitylandscape,purchasingseveralEuropeanESGconsultancies.Meanwhile,Cognizant was highly activ
28、e in the first halfof 2022,purchasing targets across the softwaredevelopment,IT staffing&recruitment,and IT BPOspaces.Other highly acquisitive system integrators onthe roster included Atos,Tech Mahindra and CTSI.Top acquirers past 30 months 5|12 IT&Business Services M&A Overview 1H 2022$8.3 billion$
29、8.3 billion11 MayDigital bridge Investment management and IFM acquire Switch Inc.at 17.6x revenue&44.3x EBITDA$3.9 billion$3.9 billion16 MayThe Carlyle Group acquires ManTech International Corp.at 1.6x revenue and 15.9x EBITDA$2.1 billion$2.1 billion07 MarVectrus Inc.acquires Vertex Aerospace LLC$1.
30、8 billion$1.8 billion16 JuneTELUS Corporation acquires LifeWorksInc.at 2.8x revenue$1.7 billion$1.7 billion03 JanDigital Realty Trust Inc.acquires Teraco Data Environments Pty.Ltd.$1.06 billion$1.06 billion21 JanFrancisco Partners acquires IBMs Healthcare data and analytics assets$997 million$997 mi
31、llion15 FebMadison Dearborn Partners LLC acquires MoneyGram International Inc.at 1.4x revenue and 12x EBITDA$900 million$900 million15 FebAkamai Technologies Inc.acquires Linode LLCLARGEST DISCLOSED DEALS OF 1H2022Transaction volume almost doubles YoY with a 92%increase YoYMultiples remain very stab
32、le Private equity players maintain their regular share of transactions while paying significantly higher multiples vs.strategic buyersCybersecurity-related service providers garner interest as M&A targets in both the Tech Services&Support and Integration Services segments,with M&A activity from both
33、 strategic and financial buyersAccenture continues to dominate the top acquirer roster,diversifying acquisition pool to reflect changing enterprise requirements like sustainability reportingTop trends in IT&Business Services M&A6|12 IT&Business Services M&A Overview 1H 2022Integration Services16%IT
34、Outsourced Services27%Tech Services&Support57%Headquarters of IT&Business Services targetsLAST 30 MONTHSIT Outsourced ServicesTransaction processing,BPO,software development,staffing,contract manufacturing&design,customer care.Tech Services&SupportTech&management consulting,web&email marketing measu
35、rement,design.Integration servicesNetworkintegration,telecomintegration,systemsintegration,securityintegration.Europe28%North America59%RoW13%Europe72%North America23%RoW5%Over the past 30 months,59%of all transactionsworldwide targeted a North American company,compared to 28%targeting a European co
36、mpany.Meanwhile,72%of the European.targets were bought by acquirers that werealsoEuropean,pointingtothecontinuedimportance of regional deal-making and consolidationof market share on the continent.Headquarters of acquirers of European targetsData breakdown geography and subsector,past 30 monthsTech
37、Services&Support is the largest segment of theIT Services sector,accounting for over half of all dealsin the past 30 months.This segment has seen aconstant increase in proportion of deal volume since1H2021,when it stood at 44%of the total deals,nodoubt as a result of mounting pressure to digitaliser
38、apidly in the face of competitive threats.However,the IT Outsourced Services segment hasattracted the highest EBITDA multiples over the past30 months,with the trailing 30-month EBITDAmultiple reaching 11.7x,against 8.0 x and 5.7x in theTech Services&Support and Integration Servicessegments,respectiv
39、ely.7|12 IT&Business Services M&A Overview 1H 20220.0 x4.0 x8.0 x12.0 x16.0 x Trailing 30-monthEBITDA multipleContinuedgrowthin transactionvolumeM&A activity in the Tech Services&Support segmenthas seen the highest overall increase in the sector.Thesegment saw a total of 473 deals in 1H2022 a 53%inc
40、rease on the 310 deals recorded in 2H2021.The trailing 30-month revenue multiple has shownstability,coming in at 0.9x in 1H2022,and with 50%ofall deals in the 0.5x to 1.7x revenue range.Meanwhile,the trailing 30-month EBITDA multiple came in at8.0 x,broadly in line with the single-digit range seensi
41、nce 2019.In addition,50%of all EBITDA multipleswere between 5.8x and 11.1x.UScybersecurityplayerexpandscapabilitiesCyber-and IT security consulting services garneredhuge interest in 1H2022.Largest amongst the manyacquisitions in this space is the$400 million acquisitionof Xator Corporation a by US-b
42、ased technologycompany Parsons Corporation(NYSE:PSN).Foundedin 2005,Xator provides mission-focused solutions toprotect critical infrastructure and address nationalsecurityrequirementsfortheUSGovernmentaround the world.The acquisition will reportedly0 x1x2x3x4x Trailing 30-monthrevenue multiple1.7x0.
43、9x0.5x11.1x5.8x8.0 xACQUIREDJune 2022$400 millionTech Services&Support0.9x0.9x0.9x1.0 x0.9x1.0 x1.0 x0.9x0.8x0.9x0.9x12.5x14.3x13.0 x13.0 x10.8x9.0 x8.4x7.9x8.3x8.8x8.0 x0.0 x2.0 x4.0 x6.0 x8.0 x10.0 x12.0 x14.0 x16.0 x-100 200 300 400 5001H 20172H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20
44、212H 20211H 202220.1x0.1x44.3x3.1xbolsterParsonstechnical capabilities incriticalinfrastructureprotection,counter-uncrewedaircraftsystems(cUAS),cybersolutionsandothersegments.8|12 IT&Business Services M&A Overview 1H 2022OtheracquisitionsinthespaceincludeKeterEnvironmentalServicessacquisitionofLinkI
45、nternation,a provider of environmental sustainabilitysolutions;andEtteplansacquisitionofLCAConsulting,a Finnish sustainability consultancy.ACQUIREDJune 2022Not disclosedACQUIREDApril 2022Not disclosedACQUIREDMay 2022Not disclosedTech Services&Support(cont.)Sustainabilitybecomescentralto IT consultin
46、gWith the increasing importance of incorporatingsustainability in businesses,acquirers have shown amassiveinterestinsustainabilityandESGdataconsulting firms.Accentureisacquiringdomainexpertiseandexperienced teams in sustainability,purchasing severalEuropean ESG consultancies:Avieco,a 60-personLondon
47、-basedsustainabilityconsultancy;Brussels-headquartered Greenfish,a consulting and engineeringfirm;andmostrecently,akzente,aGermansustainability consultancy.These deals are highlighted infurther detail in our ESG Technology M&A report.JoiningtheESGwasDutchmanagementandtechnology consultancy Bearing P
48、oint,which acquired ICare,a consultancy firm specialising in sustainabilitystrategy development and environmental transition.With this acquisition,Bearing Point BV aims toaccelerate growth in key markets by expanding its keycapabilities.Established in 2008,I Care has more than 80employees in France
49、and Brazil and offers consulting.servicestopublicorganisations,NGOs,private companies andfinancial institutions torespond to the risks andopportunitiesoftheenvironmentaltransition.9|12 IT&Business Services M&A Overview 1H 20220 x5x10 x15x20 x Trailing 30-monthEBITDA multiple0.0 x2.0 x4.0 x6.0 x Trai
50、ling 30-month revenuemultipleKin+CartacontinuesEuropeanexpansionIn May 2022,global digital transformation consultancyKin+Carta,headquartered in London,announced ithad completed the acquisition of Bulgarian softwaredevelopment company Melon AD and its subsidiaries.Establishedin2003,Sofia-headquartere
51、dMelonGroup is a software engineering business with a 300-strong team of web,mobile and data specialistsworkingacrossBulgaria,NorthMacedoniaandKosovo.It is a Microsoft Gold Partner and its sectorexperience includes medtech,fintech,banking andhuman resources.For the year-ending December 31,.Thispan-E
52、uropeanexpansion is reportedlypart of Kin+CartasexpansioninSoutheasternEuropeand complements Kin+Carta Greece,as the1.4x2.2x0.6xACQUIREDMay 2022$24 millionIT Outsourced Services1.9x1.9x1.5x1.3x1.5x1.4x1.3x1.5x1.6x1.4x1.4x8.6x10.0 x9.1x9.1x10.4x10.5x9.7x11.7x11.5x11.6x11.7x0.0 x2.0 x4.0 x6.0 x8.0 x10
53、.0 x12.0 x14.0 x-20 40 60 80 100 120 140 160 180 2001H 20172H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20212H 20211H 2022VolumerecoverswithstablevaluationsTransaction volume has continued to grow in the ITOutsourced Services segment,with 153 recorded in1H2022 a 17%increase over the 131 deals
54、 in theprevious period.The trailing 30-month median revenue multiple camein at 1.4x,with 50%of all deals announced being inthe 0.6x to 2.2x.The trailing 30-month medianEBITDA multiple stood at 11.7x with 50%of all dealsin the 9.5x to 15.1x range.11.0 x0.1x11.7x15.1x9.5x33.1x1.1x2021,it had sales of
55、9m and an operating profit of2.2m.Clients include Philips,Burger King and Nokia.10|12 IT&Business Services M&A Overview 1H 20220.0 x2.0 x4.0 x6.0 x8.0 x10.0 x Trailing 30-monthEBITDA multipleACQUIREDApril 2022$540 millionIntegration Services0.5x0.6x0.9x0.9x1.1x1.1x1.1x1.1x1.1x1.1x1.8x13.4x9.9x10.0 x
56、9.1x9.0 x8.2x7.9x7.4x6.0 x5.7x5.7x0.0 x2.0 x4.0 x6.0 x8.0 x10.0 x12.0 x14.0 x16.0 x-20 40 60 80 100 120 1401H 20172H 20171H 20182H 20181H 20192H 20191H 20202H 20201H 20212H 20211H 2022M&AactivityslowsdownTheIntegrationServicessegmenthasseenaslowdown in the number of transactions,compared tothe uplif
57、t across other segments.The sub-sector saw73 deals inked compared to 93 transactions in abuzzing 2H2021.An analysis of the multiples revealed an increase in the30-month trailing revenue multiple which is up from1.1x in 2H2021 to 1.8x in 1H2022,with 50%of alldeals in the 0.7x to 2.6x revenue range Me
58、anwhile,the30-month trailing EBITDA multiple has stayed constantat 5.7x in the first half of 2022,with a wider valuationrange between 2.0 x and 6.7x.2.6x1.8x0.0 x1.0 x2.0 x3.0 x4.0 x5.0 x Trailing 30-monthrevenue multiple2.6x0.7x1.8x4.4x0.3x6.7x5.7x2.0 x1.3x9.4xIndiasWiproacquiresRizingIn April,Wipr
59、o,Indias IT consulting and businessprocess services giant,acquired Rizing,a global SAPconsulting firm,for a whopping$540 million.As oneof the leading strategic partners in the world for SAP,Rizing will become a critical extension of Wipros SAPCloud practice and Wipro FullStride Cloud Services.The co
60、mbined offering will help clients surface uniquebusinessopportunitiesandnewcompetitiveadvantages through SAP cloud implementations.It willalso help Wipro expand its leadership in oil&gas,utilities,manufacturing,and consumer industries.Rizing is headquartered in Connecticut,USA,and hasmorethan1300emp
61、loyeesin16countries across NorthAmerica,Europe,Asia,and Australia.Rizing waspreviouslyownedbyprivate equity firm OneEquity Partners.11|11 IT&Business Services M&A Overview 2H 2022SelectionofHampletonIT&BusinessServicestransactionsCertification services&compliance testing of gaming systems&gaming ind
62、ustry vendorsOn-demand digital content&social media content agency with over 200 employees operating across North America,the UK High-performance computing computer-aided engineering managed platform-as-a-service(PaaS)acquired byacquired byacquired byacquired byAboutHampletonPartnersHampleton is at
63、the forefront of international mergers and acquisitions advisory for companies with technology at their core.Hampleton Partners experienced deal makers have built,bought and sold scores of fast-growing tech businesses and provide hands-on expertise and unrivalledinternational advice to tech entrepre
64、neurs and the companies who are looking to accelerate growth and maximise value.With offices in London,Frankfurt,Stockholm and San Francisco,Hampleton offers a global perspective with sector expertise in:Autotech&Mobility,IoT,AI,FinTech,High-Tech Industrials,Cybersecurity,VR/AR,Healthtech,Digital Ma
65、rketing,Enterprise Software,IT Services,SaaS&Cloud,Insurtech and E-Commerce.acquired byUK-based provider of business management solutions based upon Microsoft Dynamics ERP and CRM product lines,and related systems integration and support servicesVertical oriented IT Services&solutions vendor in the
66、Nordics focusing on banks&insurance companies with offices in Finland and Sweden&over 230 employeesConclusion&contactsMany larger players are buying up services providers in niche areas to fill in gaps in domain expertise and experiencespecialists,with Accenture leading the charge as the most prolif
67、ic acquirer.On the sell-side,IT services companies aretaking advantage of the attractive M&A market to sell to a trade buyer or partner with a private equity player to defendor establish leadership positions on a global scale.Interestingly,in these turbulent times,M&A activity in the ITServices sect
68、or has continued its upward trajectory,withtransaction volumes growing stratospherically to almost 700completed deals in 1H2022 92%more than the year beforeand the largest number for a six-month period we have onrecord.For many enterprises,inflation,delivery uncertainty,andgeopolitical risk have acc
69、elerated the transition from ITownership to IT service sourcing,meaning more spending onmanaged services and cloud than on on-premise capabilities.Inaddition,the IT skills shortage has compelled CIOs to focus oncompetitive salaries for employee acquisition and retention.On the one hand,this has galv
70、anised an increase in softwareand services costs and spending.On the other,it is makingorganic growth increasingly difficult for providers of IT services.Miro ParizekPrincipal PAxel BrillDirector,DACHJonathanSimnettDirector,UKHampleton provides independent M&A and corporate finance advice to owners
71、of Autotech&Mobility,Internet,IT Services,Digital Commerce,and Softwarecompanies.Our research reports aim to provide our clients with current analysis of the transactions,trends and valuations within our focus areas.Data Sources:We have based our findings on data provided by industry recognised sour
72、ces.Data and information for this publication was collated from the 451 Research database,a division of The 451 Group and part of S&P Global;Capital IQ,a product of S&P Global;CB Insights;Gartner;IDC;and more.Disclaimer:This publication contains general information only and Hampleton Ltd.,is not,by
73、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 Ltd.shall not be responsible for any loss whatsoever sustained by any perso
74、n who relies on this publication.2022.For more information,please contact Hampleton Ltd.Hampleton produces regular reports on M&A activity in the following sectorsHampleton produces regular reports on M&A activity in the following sectorsHR TechInsurtechIT&Business ServicesAR/VRArtificial Intelligence Autotech&MobilityCybersecurityDigital CommerceEnterprise SoftwareFintechHealthtechYou can subscribe to these reports at http:/ FranciscoFollow HampletonFollow Hampleton