11 M&A Deals Reshaping The Channel: February 2017

Repeat Business

Although February's wave of acquisition activity wasn't small, the number of companies involved is lower than one would expect. In fact, Accenture Ciber and Capgemini were involved in seven of February's 11 acquisitions, with Accenture and Capgemini continuing to invest in digital technologies at a breakneck pace.

Ciber, meanwhile, continued to sell off parts of its European operations to raise enough capital to pay back a loan from Wells Fargo.

Other acquisitions were made, of course, as private equity firms like Tailwind capital continue to get in the channel game and other companies like Novitex and Source HOV look to create new channel behemoths to compete in the increasingly consolidated solution provider market.

Interested in learning more? Read on…


Company acquired: Idean

Head count: 51-200 employees

Annual revenue: undisclosed

Purchase price: undisclosed

Date of announcement: Feb. 16

Bolstering its digital strategy and design capabilities, Capgemini made a deal to buy Palo Alto, Calif.-based Idean.

The Paris-based company, No. 6 on the CRN Solution Provider 500, said its acquisition of Idean would enhance its digital design and strategy skills and will assist Capgemini's ability to engage clients "around envisioning strategic opportunities, designing and building digital experiences, and developing competencies in new ways of working and design thinking."

Risto Lahdesmaki, founder and CEO of Idean will join Capgemini as part of the acquisition following the close of the deal.


Company acquired: TCube Solutions

Head count: 300 employees

Annual revenue: undisclosed

Purchase price: undisclosed

Date of announcement: Feb. 16

Capgemini also bought Columbia, S.C.-based TCube Solutions in a move to boost its North American insurance industry service capabilities.

TCube Solutions specializes in property and casualty insurance software and services, and has focused offerings around integrated policy management, billing, claims operations, reinsurance management systems and data strategy.

The company, founded in 2007, will bring more than 300 people on board to Capgemini, all focused on the systems integration needs of insurance clients in both North America and the U.K.


Company acquired: SinnerSchrader AG

Head count: 505

Annual revenue: $54 million

Purchase price: $9.54 per share

Date of announcement: Feb. 20

In a move to strengthen its interactive customer experience capabilities in Germany, Accenture agreed to purchase a 62 percent majority of SinnerSchrader AG from the co-founder/CEO, CFO and other shareholders at $9.53 per share.

The Chicago-based company reported that SinnerSchrader AG's co-founder Matthias Schrader will remain CEO of the company following the acquisition and, after a transition period, lead the joint digital agency business of Accenture Interactive in Germany, Austria and Switzerland.

The SinnerSchrader leadership team will be added to the existing Accenture Interactive leadership team, increasing the executive group's expertise.


Company acquired: iDefense Security Intelligence Services

Head count: undisclosed

Annual revenue: undisclosed

Purchase price: undisclosed

Date of announcement: Feb. 9

Accenture also acquired iDefense Security Intelligence Services, bolstering the company's security group with improved cyber intelligence resources.

According to the Chicago-based consultancy, No. 2 on the CRN SP500 list, the addition of iDefense will help it protect clients by closing vulnerabilities, and protecting against malicious code and global threats with its targeted threat intelligence technology that Accenture plans to embed into services it manages for clients' security operations.

iDefense's capabilities will become an integral component of Accenture's adversary simulation services, according to the company, and iDefense's technology will be added to Accenture's threat hunting and incident response services.


Company acquired: Endgame's Federal Service Business

Head count: undisclosed

Annual revenue: undisclosed

Purchase price: undisclosed

Date of announcement: Feb. 8

In another move towards its goal of building a $1 billion security practice, Accenture struck a deal to acquire the federal services business of Arlington, Va.–based threat-detection company Endgame, Inc.

Following the close of the deal, Endgame's federal government services business will be tucked into Accenture's Federal Services group, boosting the company's federal security organization with an additional team of highly skilled cybersecurity professionals.

The acquisition of Endgame, which specializes in proactive cyber defense, builds off of an agreement that Accenture made with Endgame back in March, when the Dublin-based solution provider bought a minority share of Endgame and began reselling some of its security solutions.

As a part of the acquisition of Endgame's federal government services business, Accenture has agreed to reinforce its existing agreement with the company, and will resell its endpoint detection and response (EDR) platform.

Tailwind Capital

Company acquired: AST Corp.

Head count: 500

Annual revenue: $100 million

Purchase price: undisclosed

Date of announcement: Feb. 8

New York private equity company Tailwind Capital bought a majority stake in Oracle cloud superpower AST Corp., aiming to take the company from a $100 million reseller with 500 employees to a $1 billion company, the largest pure play Oracle cloud systems integrator in the world.

Tailwind, which has had previous success in the technology services market, is set to provide financial and management muscle to achieve that goal, according to a company statement.

AST is an Oracle Platinum partner – over 90 percent of its workforce is cloud certified – that regularly competes against companies including IBM, PwC, Deloitte, CSC and Accenture for high-profile customer engagements.


Company acquired: Ciber, Spain

Head count: 600

Annual revenue: undisclosed

Purchase price: $7 million

Date of announcement: Feb. 15

To raise funds to help pay off the $39.7 million it owes Wells Fargo on an outstanding loan, Greenwood Village, Colo.-based Ciber, has agreed to sell its Spanish business to human resources consultancy ManpowerGroup.

Ciber, No. 43 on the CRN Solution Provider 500, agreed to sell its Spanish unit to ManPower for $7 million in cash and up to an additional $1 million in earnouts depending on the performance of a certain Ciber Spain contract over the next 24 months.

Ciber reported that it plans to use $3.2 million of the transaction proceeds to reimburse Wells Fargo. The transaction is expected to close by the end of February and is subject to the consent of Wells Fargo.


Company acquired: Ciber, Germany and Denmark

Head count: undisclosed

Annual revenue: undisclosed

Purchase price: $8.8 million

Date of announcement: Feb. 3

Only 12-days before selling its Spanish operations, Ciber also agreed to sell its German and Danish businesses to German IT company Allgeier, in order to help raise the money it needs to repay Wells Fargo.

The Greenwood Village, Colo.-based company reported that it plans to use up to half of the $8.8 million from the sale to reimburse Wells Fargo, and will invest the remaining money to fund existing working capital needs.

Ciber will receive proceeds from the deal in three separate installments: at closing, in March 2018, and in March 2019. Part of the purchase price is contingent on the Ciber business unit hitting operational performance targets in 2017 and 2018.

Following the close of the deal, Allgeier plans to combine the acquired Ciber entities with its own existing SAP business under the umbrella of Allgeier Enterprise Services AG. The company said it could further expand Ciber's business thanks to relationships with enterprise domestic and international companies, as well as upper mid-market firms in Germany, France and Denmark.

Ascendum Solutions

Company acquired: Sourcebits

Head count: 1,000-5,000 employees

Annual revenue: undisclosed

Purchase price: undisclosed

Date of announcement: Feb. 15

Ascendum Solutions acquired San Francisco-based company Sourcebits, increasing its digital solutions offerings.

Formerly known as an application design company, Sourcebits has, as of late, become more of a full-service digital consultancy with offerings in analytics, the Internet of Things (IoT) and cloud solutions across several industries, including retail, financial services, wellness, travel and technology.

Ascendum is a Cincinnati-based digital solutions company with offices in Hamilton and Blue Ash, Ohio, and New York City. The company is a wholly owned subsidiary of private equity group Vora Ventures Group.

Novitex and SourceHOV

Head count: 23,000 employees combined

Annual revenue: $900 million

Purchase price: $2.8 billion

Date of announcement: Feb. 23

Novitex and SourceHOV have agreed to merge, creating a $1.5 billion, 23,500-person IT services and MSP powerhouse that caters to 60 percent of the Fortune 100.

Stamford, Conn.-based Novitex and Irving, Tex.-based SourceHOV are being brought together in a $2.8 billion transaction managed by St. Louis-based Quinpario, a special purpose acquisition company.

Upon the close of the deal, expected during the second quarter, the combined, publicly-traded company will be called Exela Technologies.

Novitex is currently owned by Apollo Global Management while SourceHOV is majority owned by HandsOn Global Management. The new company's board of directors will consist of eight members, three of whom will be nominated by HandsOn Global Management, two of whom will be nominated by Apollo, and three of whom will be independent directors.