Professional Services / Technology Services Practice Overview

Introduction

Harris Williams is pleased to present our Professional Services Industry Update for January 2021. In this month’s update, we are highlighting Technology Services. This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global professional services industry.

We hope you find this edition helpful, and we encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities or our relevant industry experience.

Our Practice

Harris Williams’ Business Services Group has experience advising companies that provide a range of commercial, industrial and professional services. 

This particular report focuses on trends and metrics in the following areas:

• Business Process Outsourcing
• Consulting
• Education & Training
• Engineering
• Financial Services
• Governance, Risk & Compliance
• Human Capital Management
• Information Technology Services
• Insurance & Risk Management
• Legal Services
• Marketing & Information
• Technology Enabled Services

Representative Technology Services Transactions

What We’re Reading

Looking Back: Cloud Computing in 2020 Experienced Massive Growth

IT Pro Today  1/6/2021

“With hundreds of millions of people working from home for most of the year, demand for cloud computing reached all-time highs. The concept of digital transformation, which basically means that companies are converting analog processes to digital or online ones, has been a driving factor for organizations of all sizes moving to cloud computing in 2020.”

Read the full article here.

The Eight Trends That Will Shape the Data Center Industry in 2021

Data Center Frontier  1/6/2021

“Data center infrastructure has been the driving force in the rise of the digital economy. That was never more apparent than in 2020, when cloud technology enabled society to retool to survive the COVID-19 pandemic. This trend will continue in 2021, as the world slowly defines the contours of the ‘next normal’ in its battle with COVID-19. It is an enormous challenge, and an enormous opportunity, and digital infrastructure will be central to this transition.”

Read the full article here.

Co-Managed IT: Shifting to a New IT Model

Information Age  12/24/2020

“This is driving an accelerating trend towards co-managed IT services, where managed service providers (MSPs) support the in-house IT teams of larger organizations with some, but not all, of their responsibilities.”

“Working with an MSP in this way can help an enterprise to respond more quickly and flexibly to arising IT needs, without having to spend time on hiring and training extra in-house staff.”

Read the full article here.

IBM and Cognizant Acquisitions Cap a Wave of IT Services Deals in 2020

VentureBeat  12/21/2020

“Overall, IBM has now acquired three IT services providers in 2020, while Cognizant has acquired nine. Accenture, meanwhile, has rolled up the most IT services this year after acquiring no less than 29 smaller companies. IT vendors themselves in the past year are also fueling this acquisition activity as they look to expand their portfolios beyond product sales. Salesforce this month, for example, acquired Acumen Solutions to expand its professional services capability.”

Read the full article here.

MSP 2021: Year of the Major Strategic Partner

Channel Futures  12/21/2020

“The first and foremost concern for any service provider must always be fulfillment of the needs of the customer. As we approach 2021, after everything that has happened in 2020, we must closely examine and discuss how those needs have changed.”

“If the IT channel has learned anything over the years, its that you must always be innovating, changing, growing and increasing your value proposition for customers. Thankfully, technology is the gift that keeps on giving new ways to achieve that.”

Read the full article here.

The Surprising Success of XaaS

Forbes  12/18/2020

“Business leaders were pursuing digital transformation before the pandemic. But when Covid-19 hit and employees were sent home, many faced the reality that their technology infrastructure was not up to the task at hand. This meant accelerating their investments in digital transformation for those in the position to do so.”

Read the full article here.

Public Markets¹

Historical Stock Prices – Last 5 Years

Historical Median TEV/LTM EBITDA Multiples – Last 5 Years

Notes: Data as of January 14, 2021. Sub-sector indices weighted by stock price.

Public Markets¹

Notes: Data as of January 14, 2021. 

Economic Trends

M&A Market Trends¹

Professional Services M&A Volume by Year

Note: Data through January 14, 2021.

Representative Technology Services M&A Transactions by Sector

1. S&P Global Capital IQ

2. U.S. Bureau of Economic Analysis

3. The Conference Board

4. U.S. Bureau of Labor Statistics

5. U.S. Department of Labor

6. Institute for Supply Management

 

Public Comparable Companies:

BPO: Cognizant, Computershare, DXC, ExlService, Genpact, Sykes Enterprises, Tata Consultancy, TTEC, Wipro, and WNS

Consulting: Accenture, CBIZ, CRA International, FTI Consulting, Huron Consulting Group, ICF International, and Resources Connection

Human Capital: 51job, ASGN, Barrett Business Services, Hays, Heidrick & Struggles International, Insperity, Kelly Services, Kforce, Korn Ferry, ManpowerGroup, Randstad, Robert Half International, SThree, TrueBlue, Willis Towers Watson

IL&R Services: Aon, Arthur J. Gallagher & Co., Brown & Brown, Crawford & Company, Marsh & McLennan Companies, Willis Towers Watson

M&I Services: Alliance Data Systems, comScore, CoreLogic, CoStar Group, Equifax, Experian, FactSet, Fair Isaac, Forrester Research, IHS Markit, Informa, LiveRamp Holdings, Moody's, Morningstar, Nielsen Holdings, Omnicom Group, Publicis Groupe, The Interpublic Group of Companies, Thomson Reuters, Verisk Analytics, Viad, Wolters Kluwer, WPP

Transaction Processing: Automatic Data Processing, Fidelity National Information Services, Global Payments, Jack Henry & Associates, Paychex, The Western Union Company

Education and Training: Adtalem Global Education, American Public Education, Franklin Covey, GP Strategies, Grand Canyon Education, K12, Lincoln Educational Services, Pearson, Scholastic, Strategic Education, Zovio

IT Consulting: Accenture, Atos, Capgemini, CGI, Cognizant Technology Solutions, DXC Technology, Genpact, HCL Technologies, Infosys, Tata Consultancy Services, Tech Mahindra, Wipro

Managed Services: American Virtual Cloud Technologies, NetApp, TTEC, Zscaler, Rackspace Technology, Datto, Snowflake