sectorwatch: management consulting · 19jul19 w group inc. wavestone sa 30.50 26.10 1.2x - 28jun19...
TRANSCRIPT
Sectorwatch:Management ConsultingApril 2020
2
Management ConsultingApril 2020
Sector Dashboard [4]
Public Basket Performance [5]
Operational Metrics [7]
Valuation Comparison [10]
Recent Deals [13]
Appendix [15]
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with averbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document wasbelieved to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations asto the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Pleasenotify 7 Mile Advisors if it was distributed in error.
3
Overview
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.
Dashboard• Summary metrics on the sector• Commentary on market momentum by
comparing the most recent 12-month performance against the last 3-year averages.
Public Basket Performance• Summary valuation and operating metrics
for a basket of comparable public companies
Valuation Comparison• Graphical, detailed comparison of
valuation multiples for the public basket
Recent Deals• The most recently announced deals in the
sector
4
Dashboard
Operating Metrics
Valuation
Revenue Growth Momentum
2.6% 1 - year revenue growth compared to revenue growth
average for last 3 years
Pricing / Gross Margin Momentum
0.3% 1 - year gross profit % compared to gross profit %
average for last 3 years
Profitability
-1.1% 1 - year EBITDA % compared to EBITDA % average for
last 3 years
Current revenue growth rate exceeds the average of the last 3 years by this
amount, indicating that market momentum is increasing
Current gross profit margin exceeds the average of the last 3 years gross profit
margin by this amount, indicating supplier pricing power
Current EBITDA margin is less than the average of the last 3 years EBITDA
margins, which may signal further consolidation
10.3%
11.2%
34.3%
0% 10% 20% 30% 40%
Median LTM Rev. Growth %
Median LTM EBITDA Margin %
Median LTM GP Margin %
1.6x
12.1x
16.2x
22.9x
0x 10x 20x 30x
Median TEV / LTM Revenue
Median TEV / LTM EBITDA
Median TEV / LTM EBIT
Median Price / LTM Earnings
5
Public Basket
Company TEV $mLTM
Rev $m
Rev Growth
YoY GP %EBITDA
%TEV / Rev X
TEV / EBITDA
X # FTEsRev / FTE $k
The Hackett Group, Inc. 414 261 -1% 37% 15% 1.6 9.7 1,143 228
CRA International, Inc. 426 451 8% 30% 10% 0.9 6.7 779 579
Huron Consulting Group Inc. 1,350 877 10% 34% 11% 1.5 12.1 3,750 234
ICF International, Inc. 1,596 1,479 11% 36% 9% 1.1 9.4 7,000 211
FTI Consulting, Inc. 4,996 2,353 16% 35% 15% 2.1 12.4 5,567 423
Booz Allen Hamilton Holding Corporation
12,379 7,274 11% 24% 10% 1.7 15.5 26,100 279
Accenture plc 110,189 44,656 6% 31% 16% 2.5 14.4 492,000 91
Average 18,764 8,193 9% 32% 12% 1.6 11.5 76,620 292
Median 1,596 1,479 10% 34% 11% 1.6 12.1 5,567 234
share price as of 24Apr20
6
Public Basket Valuation Trends
Public EBITDA Multiples over Time
Public Revenue Multiples over Time
0.0x
0.5x
1.0x
1.5x
2.0x
Jun-1
5
Sep-1
5
Dec-1
5
Mar-
16
Jun-1
6
Sep-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Dec-1
7
Mar-
18
Jun-1
8
Sep-1
8
Dec-1
8
Mar-
19
Jun-1
9
Sep-1
9
Dec-1
9
Mar-
20
TEV/Revenue - Median TEV/Revenue - Average
0x
5x
10x
15x
20x
Jun-1
5
Sep-15
Dec-1
5
Mar-
16
Jun-1
6
Sep-16
Dec-1
6
Mar-
17
Jun-1
7
Sep-17
Dec-1
7
Mar-
18
Jun-1
8
Sep-18
Dec-1
8
Mar-
19
Jun-1
9
Sep-19
Dec-1
9
Mar-
20
TEV/EBITDA - Median TEV/EBITDA - Average
11.8x
1.3x
0x
5x
10x
15x
20x
Jun-1
5
Sep-1
5
Dec-1
5
Mar-
16
Jun-1
6
Sep-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Dec-1
7
Mar-
18
Jun-1
8
Sep-1
8
Dec-1
8
Mar-
19
Jun-1
9
Sep-1
9
Dec-1
9
Mar-
20
TEV/EBITDA - Median TEV/Revenue - Median
TEV/EBITDA - Average TEV/Revenue - Average
7
Operational Metrics
LTM Gross Profit Margin % LTM EBITDA %
- 5% 10% 15% 20%
Median
ICF International, Inc.
CRA International, Inc.
Booz Allen Hamilton Holding
Corporation
Huron Consulting Group Inc.
FTI Consulting, Inc.
The Hackett Group, Inc.
Accenture plc
- 10% 20% 30% 40%
Median
Booz Allen Hamilton Holding
Corporation
CRA International, Inc.
Accenture plc
Huron Consulting Group Inc.
FTI Consulting, Inc.
ICF International, Inc.
The Hackett Group, Inc.
8
Operational Metrics
LTM Revenue Growth %LTM Revenue per
Full Time Employee x 000’s
(5%) - 5% 10% 15%
Median
The Hackett Group, Inc.
Accenture plc
CRA International, Inc.
Huron Consulting Group Inc.
ICF International, Inc.
Booz Allen Hamilton Holding
Corporation
FTI Consulting, Inc.
$- $200 $400 $600 $800
Median
Accenture plc
ICF International, Inc.
The Hackett Group, Inc.
Huron Consulting Group
Inc.
Booz Allen Hamilton Holding
Corporation
FTI Consulting, Inc.
CRA International, Inc.
9
Operational Metrics
Accounts Receivable TurnoverAverage Days
Sales Outstanding
0x 1x 2x 3x 4x 5x 6x
Median
CRA International, Inc.
FTI Consulting, Inc.
ICF International, Inc.
Huron Consulting Group Inc.
The Hackett Group, Inc.
Booz Allen Hamilton Holding
Corporation
Accenture plc
0x 20x 40x 60x 80x 100x120x
Median
Accenture plc
Booz Allen Hamilton Holding
Corporation
The Hackett Group, Inc.
Huron Consulting Group Inc.
ICF International, Inc.
FTI Consulting, Inc.
CRA International, Inc.
10
Valuation
TEV / LTM Revenue TEV / LTM EBITDA
0x 1x 2x 3x
Median
CRA International,
Inc.
ICF International, Inc.
Huron Consulting
Group Inc.
The Hackett Group,
Inc.
Booz Allen Hamilton
Holding Corporation
FTI Consulting, Inc.
Accenture plc
0x 4x 8x 12x 16x 20x
Median
CRA International, Inc.
ICF International, Inc.
The Hackett Group, Inc.
Huron Consulting Group Inc.
FTI Consulting, Inc.
Accenture plc
Booz Allen Hamilton Holding
Corporation
11
Valuation
TEV / LTM EBIT Price / LTM Earnings
0x 10x 20x 30x
Median
The Hackett Group, Inc.
CRA International, Inc.
ICF International, Inc.
FTI Consulting, Inc.
Accenture plc
Booz Allen Hamilton Holding
Corporation
Huron Consulting Group Inc.
0x 5x 10x 15x 20x 25x 30x
Median
CRA International, Inc.
ICF International, Inc.
The Hackett Group, Inc.
Accenture plc
FTI Consulting, Inc.
Booz Allen Hamilton Holding
Corporation
Huron Consulting Group Inc.
12
Valuation
Historical Valuation Multiples versus Gross Profit
Historical Valuation Multiples versus Revenue Growth Rate
7x 9x 10x 12x 12x 14x 16x
30.3%
35.5%
37.4%
34.3%
34.8% 31.3%
23.8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0x
2x
4x
6x
8x
10x
12x
14x
16x
18x
LTM
GP%
EBIT
DA(x
)
EBITDA(x) LTM GP%
7x 9x 10x 12x 12x 14x 16x
8.1%
10.5%
(1.4%)
10.3%
16.0%
5.7%
11.0%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0x
2x
4x
6x
8x
10x
12x
14x
16x
18x
LTM
RG
R%
EBIT
DA(x
)
EBITDA(x) LTM RGR%
13
Recent Transactions
Date Target Buyer / Investor
Total Transaction
Value Target
Revenue TEV /
Revenue TEV /
EBITDA
23Apr20 HumanCapient Consulting Sdn Bhd Sino Hua-An International Berhad 3.33 - - -
19Mar20 Strativa, Inc. Avasant LLC - - - -
12Mar20 Wuhan Huazi Enterprise Management Consulting Co., Ltd. Beijing Franshion Yicheng Properties Limited 974.59 - - -
11Mar20 Talavant, Inc. Baker Tilly Virchow Krause, LLP - 3.80 - -
3Mar20 Delphos International, Ltd. APQ Global Limited 3.50 3.70 0.9x -
19Feb20 Kalypso LP Rockwell Automation, Inc. - - - -
22Jan20 Duff & Phelps Corporation Stone Point Capital LLC; Further Global Capital Management, L.P.
4,200.00 - - -
20Dec19 Conway MacKenzie, Inc. Riveron Consulting, LP - - - -
18Dec19 Maven Wave Partners LLC Atos SE - - - -
18Dec19 Net eSolutions Corporation NTT DATA Services, LLC - - - -
17Dec19 Purple Square Management Partners B.V. Ctac N.V. - 5.58 - -
2Dec19 Apis Group Pty Ltd Accenture plc - - - -
11Nov19 Presence of IT, Inc. Workforce Insight, LLC - - - -
31Oct19 Bow & Arrow Limited Accenture Interactive - - - -
29Oct19 Shanghai Dingqun Enterprise Management Consulting Co., Ltd.
Sinopharm Holding GuoDa Drug Store Co., Ltd. 132.22 - - -
23Oct19 Revel Consulting, Inc. Infogain Corporation - - - -
2Oct19 Anthony Hodges Consulting Limited Arthur J. Gallagher & Co. - - - -
22Mar19 Hangzhou Yihui Business Consulting Co., Ltd. Shanghai Xuxiao Enterprise Management Co., Ltd. 53.40 - - -
18Sep19 Hangzhou Yihui Business Consulting Co., Ltd. Shanghai Xuxiao Enterprise Management Co., Ltd. 40.83 - - -
25Jul19 PowerData Solutions SL Devoteam SA - 2.19 - -
3Sep19 Westney Consulting Group, Inc. McKinsey & Company, Inc. - - - -
5Jun19 Torres Advanced Enterprise Solutions, LLC Bootstrap Capital, LLC - - - -
22Jul19 Frank & Company, p.c. Prager Metis CPAs, LLC - - - -
19Jul19 W Group INC. Wavestone SA 30.50 26.10 1.2x -
28Jun19 Changxing Lincheng Enterprise Management Consulting Co., Ltd.
Noblelift Intelligent Equipment Co.,Ltd. 53.73 - - -
26Jun19 Auriemma Consulting Group, Inc. CNL Strategic Capital, LLC 44.50 - - -
14
APPENDIX:
Public Basket
Constituents
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with averbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document wasbelieved to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations asto the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Pleasenotify 7 Mile Advisors if it was distributed in error.
Management ConsultingApril 2020
15
Public Basket
The Hackett Group, Inc.
The Hackett Group, Inc. operates as a strategic advisoryand technology consulting firm primarily in North Americaand European countries. Its executive advisory programsinclude best practice intelligence center, an onlinesearchable repository of best practices, performancemetrics, conference presentations, and associated research;best practice accelerators that provide Web based access tobest practices, customized software configuration tools, andbest practice process flows; advisor inquiry, an inquiryservice used by clients for access to fact-based advice onproven approaches and methods; best practice research, aresearch that provides insights into the proven approaches;and peer interaction comprising member-led Webcasts,annual best practice conferences, annual member forums,membership performance surveys, and client-submittedcontent. The company’s benchmarking services conductstudies in the areas of selling, general and administrative,finance, human resources, information technology,procurement, enterprise performance management, sharedservice centers, and working capital management. Thecompany was founded in 1991 and is headquartered inMiami, Florida.
Date Key Development Headline5/7/19 The Hackett Group Intends To Seek Acquisitions
0x
1x
2x
3x
Revenue Multiples - The Hackett Group, Inc.
TEV/Revenue Average
0x
10x
20x
30x
EBITDA Multiples - The Hackett Group, Inc.
TEV/EBITDA Average
0x
20x
40x
60x
P/E Multiples - The Hackett Group, Inc.
P/E Average
16
Public Basket
CRA International, Inc.
CRA International, Inc., a consulting company, provideseconomic, financial, and management consulting services inthe United States, the United Kingdom, and internationally.The company advises clients on economic and financialmatters pertaining to litigation and regulatory proceedings;and guides corporations through critical business strategyand performance-related issues. The company’s consultingservices include research and analysis, expert testimony,and support in litigation and regulatory proceedings in theareas of finance, accounting, economics, insurance, andforensic accounting and investigations to corporate clientsand attorneys. In addition, its management consultingservices comprise strategy development, performanceenhancement, corporate strategy and portfolio analysis,estimation of market demand, new product pricingstrategies, valuation of intellectual property and otherassets, assessment of competitors' actions, and analysis ofnew sources of supply. It serves various industries, includingagriculture; banking and capital markets; chemicals;communications and media; consumer products; energy;entertainment; financial services; health care; insurance;life sciences; manufacturing; metals, mining, and materials;oil and gas; real estate; retail; sports; telecommunications;transportation; and technology. CRA International, Inc. wasfounded in 1965 and is headquartered in Boston,Massachusetts.
0.0x
0.5x
1.0x
1.5x
2.0x
Revenue Multiples - CRA International, Inc.
TEV/Revenue Average
0x
4x
8x
12x
16x
20xEBITDA Multiples - CRA International, Inc.
TEV/EBITDA Average
0x
20x
40x
60x
80x
P/E Multiples - CRA International, Inc.
P/E Average
17
Public Basket
Huron Consulting Group Inc.
Huron Consulting Group Inc., a professional services firm,provides advisory, technology, and analytic solutions in theUnited States and internationally. Its Healthcare segmentprovides advisory services in the areas of strategy, caretransformation, financial and operational performance,technology and analytics, and leadership development tonational and regional hospitals, integrated health systems,academic medical centers, community hospitals, andmedical groups. Its Business Advisory segment providesenterprise performance management, enterprise resourceplanning, business intelligence and analytics, customerrelationship management, and data management services;and capital advisory, transaction advisory, operationalimprovement, restructuring and turnaround, valuation, anddispute advisory services. Huron Consulting Group Inc. wasfounded in 2002 and is headquartered in Chicago, Illinois.
Date Key Development Headline10/29/19 Huron Announces Partnership with Medically Home Group,
Inc
0x
1x
2x
3x
4xRevenue Multiples - Huron Consulting Group
Inc.
TEV/Revenue Average
0x
5x
10x
15x
20xEBITDA Multiples - Huron Consulting Group
Inc.
TEV/EBITDA Average
0x
20x
40x
60x
80x
100x
P/E Multiples - Huron Consulting Group Inc.
P/E Average
18
Public Basket
ICF International, Inc.
ICF International Inc. provides management, marketing,technology, and policy consulting and implementationservices to government and commercial clients in the UnitedStates and internationally. It also identifies, defines, andimplements policies, plans, programs, and business toolsthrough a range of standard and customized methodologiesfor its clients; conducts survey research; collects andanalyzes various data to understand critical issues andoptions for its clients; and provides actionable businessintelligence, as well as information and data managementsolutions that allow integrated, and purpose-driven datausage. ICF International, Inc. was founded in 1969 and isheadquartered in Fairfax, Virginia.
Date Key Development Headline1/13/20 ICF International, Inc., Incentive Technology Group Llc -
M&A Call
2/26/19 ICF To Seek Acquisitions
0.0x
0.5x
1.0x
1.5x
2.0xRevenue Multiples - ICF International, Inc.
TEV/Revenue Average
0x
5x
10x
15x
20xEBITDA Multiples - ICF International, Inc.
TEV/EBITDA Average
0x
10x
20x
30xP/E Multiples - ICF International, Inc.
P/E Average
19
Public Basket
FTI Consulting, Inc.
FTI Consulting, Inc. provides business advisory services tomanage change, mitigate risk, and resolve disputesworldwide. The company’s Corporate Finance &Restructuring segment provides turnaround andrestructuring, business transformation, interimmanagement, valuation and financial advisory, transaction,dispute advisory, and tax services, as well as mergers andacquisitions (M&A), and M&A integration services. ItsForensic and Litigation Consulting segment offers anti-corruption investigations and compliance, and data andanalytics, as well as compliance, monitoring, andreceivership services; cybersecurity, forensic accounting andadvisory, and global risk and investigations practice; andconstruction solutions, dispute advisory, intellectualproperty, trial, business insurance claims, and healthsolutions. FTI Consulting, Inc. was founded in 1982 and isheadquartered in Washington, District of Columbia.
Date Key Development Headline8/7/19 FTI Consulting, Inc. (NYSE:FCN) completed the acquisition of
Andersch AG Wirtschaftsprüfungsgesellschaft.
6/27/19 FTI Consulting, Inc. (NYSE:FCN) entered into a definitive agreement to acquire Andersch AG Wirtschaftsprüfungsgesellschaft.
11/30/18 FTI Consulting May Seek Acquisitions
0x
1x
2x
3xRevenue Multiples - FTI Consulting, Inc.
TEV/Revenue Average
0x
5x
10x
15x
20xEBITDA Multiples - FTI Consulting, Inc.
TEV/EBITDA Average
0x
20x
40x
60xP/E Multiples - FTI Consulting, Inc.
P/E Average
20
Public Basket
Booz Allen Hamilton Holding Corporation
Booz Allen Hamilton Holding Corporation providesmanagement and technology consulting, engineering,analytics, digital, mission operations, and cyber solutions togovernments, corporations, and not-for-profit organizationsin the United States and internationally. The company offersconsulting solutions for various domains, businessstrategies, human capital, and operations. It also providesanalytics services, which focuses on deliveringtransformational solutions in the areas of decision analytics,including operations research and cost estimation;automation; and data science, which include predictivemodeling and machine learning, as well as new or emergingareas, such as deep learning and artificial intelligence. BoozAllen Hamilton Holding Corporation was founded in 1914 andis headquartered in McLean, Virginia.
0x
1x
2x
3xRevenue Multiples - Booz Allen Hamilton
Holding Corporation
TEV/Revenue Average
0x
10x
20x
30xEBITDA Multiples - Booz Allen Hamilton
Holding Corporation
TEV/EBITDA Average
0x
10x
20x
30x
40xP/E Multiples - Booz Allen Hamilton Holding
Corporation
P/E Average
21
Public Basket
Accenture plc
Accenture plc provides consulting, technology, andoutsourcing services worldwide. Its Communications, Media& Technology segment provides professional services thathelp clients accelerate and deliver digital transformation, andenhance business results through industry-specific solutionsfor communications, media, and high tech industries, as wellas for software platforms. The company’s Financial Servicessegment offers services that address profitability pressures,industry consolidation, regulatory changes, and the need tocontinually adapt to new digital technologies. This segmentserves clients in banking, capital markets, and insuranceindustries. Accenture plc was founded in 1989 and is basedin Dublin, Ireland.
Date Key Development Headline4/19/20 Accenture plc (NYSE:ACN) agreed to acquire Gekko Mentions
légales.
4/14/20 Accenture plc (NYSE:ACN) entered into an agreement to acquire NIKE Group S.p.A.
4/6/20 Accenture plc (NYSE:ACN) acquired Revolutionary Security LLC.
4/1/20 Accenture plc (NYSE:ACN) acquired Yesler, Inc.
3/27/20 Accenture and the Digital Dollar Foundation Announce Partnership
0x
1x
2x
3x
4x
Revenue Multiples - Accenture plc
TEV/Revenue Average
0x
10x
20x
30xEBITDA Multiples - Accenture plc
TEV/EBITDA Average
0x
10x
20x
30x
40xP/E Multiples - Accenture plc
P/E Average
22
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A andprivate capital transactions and provide market assessments and benchmarking. As a close-knit team with a long history together and a laserfocus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets.Securities offered through 7M Securities LLC.
Leroy Davis, Partner 704.899.5962 [email protected]
Tripp Davis, Partner 704.899.5762 [email protected]
Andy Johnston, Partner 704.899.5961 [email protected]
Mark Landry, Managing Director 561.972.0609 [email protected]
Ben Lunka, Managing Director 704.496.2995 [email protected]
John Cooper, Director 704.973.3996 [email protected]
Tim Frye, Director 704.973.3994 [email protected]
Kristina Sergueeva, Director 704.899.5149 [email protected]
Ben Garber, Vice President 412.626.7898 [email protected]
Nicholas Prendergast, Vice President 704.973.3995 [email protected]
Garth Martin, Vice President 704.973.3997 [email protected]
Ariail Barker, Director, Sales & Marketing 704.981.2908 [email protected]
Emily Halstenberg, Marketing & Sales Coordinator 704.409.9912 [email protected]
Marty Johnson, Senior Associate 704.973.3999 [email protected]
Sydney Scadden, Senior Associate 704.973.3998 [email protected]
Steve Buffington, Associate 704.960.1828 [email protected]
Dennis Fox, Associate 704.706.9168 [email protected]
Daniel Kim, Associate 704.912.4584 [email protected]
Olufunke Abass, Associate 704.285.8171 [email protected]
Robin Siegel, Analyst 704.490.4714 [email protected]
CONTACT INFO