Technology and Digital Media
Investment Banking
M&A Advisory
IT Services, Cloud and Managed Services
M&A Update – Q1 2015
April 3, 2015
Generation Equity Advisors, LLC
8560 W. Sunset Blvd, Suite 500
West Hollywood, CA 90069
(310) 684-3130
TechMediaMergers.com
Generation Equity Advisors is an independent investment banking and M&A advisory firm
focused exclusively on the global Software, IT Services and Digital Media industry sectors. We
cover the IT Services sector comprehensively including companies that provide cloud services,
systems integrators, IT consultants, hosting/data centers, VAR’s and managed services firms. We
advise buyers and sellers of companies and efficiently execute M&A transactions that help
increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions
to date and have current clients and relationships globally with software, IT services and digital
media companies as well as leading private equity firms.
Aaron Solganick, CEO
Generation Equity Advisors
8560 West Sunset Blvd, Suite 500
West Hollywood, CA 90069
+1 (310) 684-3130 x101
[email protected]
Table of Contents:
M&A Update: “M&A Mania” – Page 3
IT Services M&A Update: “Q1 Transactions” – Page 4
Average M&A Valuation Multiples – Page 7
IT Services Public Company Valuation Table – Page 8
IPO Spotlight: “GoDaddy” – Page 9
M&A Spotlight: “All Covered/Preferred Networks – Page 10
M&A Spotlight: “Stefanini / IHM – Page 11
M&A Spotlight: “Ingram Micro/Tech Data” – Page 12
Sources for our research and data include: Dealogic, Thompson Reuters, Company Websites, SEC Filings
DISCLAIMER
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular company, individual or entity. Although we endeavor to provide accurate and timely information, there can
be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in
the future. We perform our own research and also use third party research. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation. This is not an offer or
recommendation to buy or sell securities nor is it a recommendation to merge, acquire, sell or exit a specific company or
entity. We do not hold any equity or debt position in any of the securities listed herein as of the date of this report.
Generation Equity Advisors, LLC
Page 2
M&A Mania: Deal Activity Hits 8-year High
Global merger activity is off to the best annual start since 2007 as deal making momentum has
carried into this year. According to data from Dealogic, the first three months of 2015 got off to a
strong start with $902.2 billion in announced M&A, the highest Q1 total since 2007 ($1.08 trillion).
14 deals with a value of $10 billion+ were announced ($267.4 billion), the most in a first quarter
since 2006 (15 deals). Global M&A volume was up 23% in Q1 2015 from the first quarter last year
($732.8 billion).
According to the global M&A activity data for Q1 2015 released by Thomson Reuters, the total
number of announced deals also jumped from 8,237 in 2014 to 9,165 in 2015. Both these factors
made Q1 2015 the best first quarter for the M&A industry since 2007 in terms of announced deals.

U.S. M&A activity had its largest first quarter since 2000 with $414.7 billion, and it was the
best first quarter ever for Asia (non-Japan) M&A with $199.7 billion.

Cross-border M&A also performed well, reaching $315.2 billion - the highest first quarter
volume since 2007 when activity reached $357.9 billion, according to Dealogic.

Technology was the leading sector for cross-border activity (416 deals). NXP
Semiconductors’ (Netherlands) $16.7 billion bid for Freescale Semiconductor, an exit for
Blackstone, Carlyle, Permira, and TPG Capital, will be the largest cross border Technology
deal involving a European buyer or target, on record.

Volume from $1 billion+ deals reached $624.1 billion in Q1 2015, and accounted for 69%
of M&A volume in all sectors.

Average deal size for global M&A increased 22% year-on-year to $211 million in Q1 2015,
up from $173 million in Q1 2014 and the highest Q1 average since 2007 ($223 million).

Average deal size for $1bn+ deals was $4.0bn, up 10% on 1Q 2014 ($3.6bn) and the
highest 1Q average since 2009 ($6.1bn)

Deals valued at $1bn or less totaled $278.1bn and were 31% share of total volume in 1Q
2015 and the highest 1Q volume since 2011 ($312.2bn)

Cash only payments increased to $392.8 billion in Q1 2015, up 32% from $298.2 billion in
Q1 2014. Payment using only Common Shares totaled $115.9 billion in Q1 2015, down
slightly from Q1 2014 ($117.6 billion).
One area that did see swift declines, however, was private equity. Dealogic noted $35.25 billion
of PE-backed buyout activity in the first three months of 2015, compared to $63.78 billion in Q1
2014. That’s a dollar decline of 44.7%, while the number of deals fell by 7.3%.
IT Services M&A Update
Q1 2015 is off to a strong start in terms of deals announced within the IT Services industry sector.
The following were announced M&A transactions for the first quarter:

January 2015 - All Covered, a division of Konica Minolta Business Solutions U.S.A., Inc.
(Konica Minolta) and one of the nation’s leading IT Services companies, has acquired
the assets of Preferred Networks Corporation of Atlanta. The company’s clients will now
be serviced by the All Covered IT Services division of KMBS, giving All Covered a stronger
foothold in the greater Atlanta area. The acquisition became official January 1, 2015.
Terms of the deal were undisclosed.

January 2015 - SMS Systems Maintenance Services, a portfolio company of Thomas H.
Lee Partners and Summit Partners, acquired Prob-Solve Group, which provides managed
IT support and solutions, to deepen its presence in the European market.

January 2015 - KPMG acquired Trusteq Oy to strengthen its IT security services capabilities
in Finland; this is KPMG's third recent IT security acquisition following Quibera and P3
Consulting.

January 2015 - Datapipe acquired GoGrid as part of a strategic initiative to enable
enterprise clients to better architect, deploy and manage multi-cloud hybrid IT solutions.
GoGrid Provides cloud computing and Infrastructure-as-a-Service for businesses around
the globe.

January 2015 - Tech Mahindra augments its core banking expertise, acquires banking IT
services firm SOFGEN Holdings Ltd. for an undisclosed amount. Tech Mahindra Ltd. a
specialist in digital transformation, consulting and business re-engineering announced
that it has signed a definitive agreement to acquire SOFGEN Holdings Limited (SOFGEN),
a niche consulting and services company with worldwide presence specializing in Private
Wealth, Commercial and Retail Banking solutions. The transaction is expected to close by
March 2015, subject to regulatory approvals. SOFGEN has 450+ employees with 20+ Tier 1
client relationships. Delivering solutions “in and around” core banking the company has
the 2nd largest pool of Avaloq consultants in the world and is Temenos’ most prolific
partner. With this acquisition, Tech Mahindra will have the capability to offer a unique
combination of “Change the Bank and Run the Bank” services to Retail banking, Private
Banking and Wealth Management customers globally.

January 2015 - Matchtech Group announced its intent to acquire Networkers
International Plc for $99 million to expand its geographic footprint and strengthen its IT
specialty. Networkers International PLC sources, recruits, and supplies IT personnel across
various industries in the United Kingdom and internationally. It represents a multiple of 0.4x
EV/LTM Revenues and 9.1x EV/LTM EBITDA.

January 2015 - The Aldridge Company acquired TWIST Solutions to quickly scale its
operations and better serve the SME market. Twist Solutions provides managed IT and
cloud services to small to mid-sized businesses/organizations.
Generation Equity Advisors, LLC
Page 4

January 2015 - DLT Solutions, a leading value-added reseller in government information
technology (IT) software and services, today announced that it has been acquired by
private equity firm Millstein & Co.

January 2015 - Cal Net acquired Velocity Network Solutions to strengthen its market
position on the West Coast and bolster its service offering through Velocity's managed
services portfolio. Velocity Network Solutions offers managed IT services that range from
help desk support to strategic guidance to offsite backup and disaster recovery.

January 2015 - Potomac Equity Partners invested in Orion Systems to augment its portfolio
of technology companies and provide capital to enable the Company to capitalize on
the adoption of cloud-based solutions. Orion Systems Integrators provides IT services and
systems integration services, such as program management, solution architecture,
implementation and Oracle, MSFT and SAP solutions.

February 2015 - Hitachi Systems agreed to acquire Cosmic Blue to expand its presence in
Europe, marking the Company's seventh acquisition in twelve months. Offers IT services
which includes system design and construction, cloud services and data center services.
Hitachi Data Systems also announced the acquisition of oXya SAS to bolster its managed
services portfolio and add SAP expertise to its capabilities. oXya provides IT deployment,
administration, and management services for SAP solutions.

February 2015 - Brazil based Stefanini IT Solutions merged with IHM Engenharia. Stefanini
currently operates in 34 countries and generates approximately 40% of its combined
revenues. In 2014, the group announced revenues of 2.35bn reais (US$870mn), up 11%
year-on-year. Similar growth is expected for this year.

February 2015 - Cognizant Technology Solutions signed a partnership agreement to take
over CNO IT Services to bolster its presence in India. Cognizant will receive over 600 IT
professionals from CNO. CNO IT Services is an India-based subsidiary of CNO Financial
Group, a publicly-traded life and health insurance company based in the US.

February 2015 - Telicity Group, a UK-based data center provider, has agreed to acquire
Interxion for $2.6 billion to capitalize on increased demand for data services and storage
fueled by cloud computing and mobile. Interxion Holding NV provides carrier-neutral
colocation data center services and managed services comprising systems monitoring,
systems management, engineering support and storage services.

February 2015 - Zayo Group, a provider of infrastructure solutions, agreed to acquire
Latisys for $675 million from Great Hill Partners to strengthen its infrastructure services and
expand its datacenter portfolio to 45 facilities.

February 2015 - Intellinet, a provider of management consulting and Microsoft-centric
services, entered an agreement to acquire Innovative Computer Systems to enhance its
managed services portfolio. Innovative Computer Systems provides IT consulting services
and managed services such as server, SQL, backup and virtual server maintenance and
monitoring services.
Generation Equity Advisors, LLC
Page 5

February 2015 - Marco, a provider of business IT consulting services and AV and
document management services, acquired Solbrekk to augment its managed IT services
division and expand its hosted and cloud service offerings.

February 2015 - Ernst & Young entered an agreement to acquire C3 Business Solutions to
expand its service offering to include the delivery of hosted cloud solutions and
infrastructure managed services. C3 Business Solutions provides information
management, analytics, and business intelligence consulting services.

February 2015 - Aon Hewitt acquired Kloud Ltd. to meet increased foreign demand for
Workday consulting services. Through the acquisition of Kloud, Aon Hewitt is the largest
provider of Workday services in Europe.

February 2015 - MegaPath sells its managed services business to GTT Communications –
MegaPath Corporation, one of the leading providers of voice, data, security and cloud
services in North America, today announces that the company is selling its managed
services business division to GTT Communications, Inc. (NYSE: GTT), a leading global cloud
networking provider to multinational clients. The parties expect to close on April 1, 2015,
after obtaining regulatory approvals. GTT will pay $144.8 million in cash and $7.5 million in
GTT common stock to acquire MegaPath’s Managed Services division, which provides
private networking, access services, and managed security services to over 500 large
enterprise clients.

March 2015 - Denovo, a leading provider of Oracle JD Edwards ERP cloud hosting,
consulting and managed services, announced that M/C Partners, a private equity firm
based in Boston, has invested in and acquired a majority interest in Denovo. The
financing will enable Denovo to make acquisitions and invest in the development of its
cloud and managed services offerings while providing liquidity for its founders. The terms
of the transaction were not disclosed.

March 2015 – PCM, Inc. (PCMI) announced that it has completed its acquisition of
certain assets of En Pointe Technologies Sales, Inc. (“En Pointe”), one of the nation's
largest independent IT solutions providers, headquartered in Southern California. PCM
announced on March 16, 2015 that it had entered into an agreement to acquire the
assets of En Pointe’s IT solutions provider business, excluding current tangible assets, such
as accounts receivable and inventory. Under the terms of the agreement, PCM paid an
initial purchase price of $15 million in cash and will pay certain contingent earn-out
consideration over a three year period. The assets were acquired by an indirect whollyowned subsidiary of PCM, which subsidiary now operates under the En Pointe brand.

March 2015 - Arrow Electronics (NYSE:ARW), a global solution provider with $22.8B annual
revenue, announced today that it was acquiring value-added distributor immixGroup for
an undisclosed amount. immixGroup, #37 on the CRN SP500 list, was reported by the
Washington Business Journal to have posted $920 million in revenue for 2013. Once the
transaction is closed in Q2, immixGroup will retain its focus on the government market
and operate as subsidiary of Arrow. According to USAspending.gov, immixGroup had
$418.3 million in federal sales in FY2014. Arrow expects the acquisition to be $0.10 to $0.14
accretive to EPS, excluding the impact of amortization.
Generation Equity Advisors, LLC
Page 6

March 2015 - Ingram Micro Inc. (NYSE: IM) announced the acquisition of Tech Data's
Peruvian and Chilean Businesses to expand its reach in fast-growing, high-value Latin
America market. The acquisition, which closed March 16th, is expected to add more
than $270 million annually to Ingram Micro's revenue and be slightly accretive to 2015
consolidated non-GAAP earnings per diluted share. The acquisition complements Ingram
Micro's existing operations in Peru and Chile and immediately delivers increased reach
and scale in the region, which has consistently been a top performer for the company.
In addition to delivering cost synergies through merger and integration of the two
businesses in each country, the acquisition is expected to drive further strong growth in
Technology Solutions, while increasing penetration into additional service opportunities in
Mobility, Supply Chain Solutions and Cloud.
Average M&A Valuation Multiples as of Q1 2015
IT Services
Cloud, Managed
and Hosting
Services
VAR
Enterprise
Value/Revenue (ttm)
0.4x to 1.4x
1.1x – 2.5x
0.2x - 0.4x
Enterprise
Value/EBITDA (ttm)
6.4x to 13.4x
8.4x - 13.6x
6.8x – 8.3x
Generation Equity Advisors, LLC
Page 7
Publicly Traded IT Services Firms – Valuation Table
CONSULTING
Advisory Board Co.
Charles River Associates Intl
FTI Consulting
Hackett Group
Huron Consulting Group
Information Services Group
Navigant Consulting
Resources Connection
Ticker
ABCO
CRAI
FCN
HCKT
HURN
III
NCI
RECN
Stock Price
53.59
31.12
37.47
8.94
66.15
3.99
12.96
17.51
Market Cap
2.25B
286M
1.49B
266M
1.39B
147M
623M
659M
Average
SYSTEMS INTEGRATORS
Cap Gemini
CIBER
CGI Group
Edgewater Technology
Hackett Group
Perficient
Ticker
CAP.PA
CBR
GIB
EDGW
HCKT
PRFT
Stock Price
76.37
4.12
42.45
6.81
8.94
20.69
Market Cap
12.01B
324M
13.24B
78M
266M
729M
Average
OUTSOURCING
Accenture
ATOS
Computer Services Corp.
HP
IBM
iGATE Corp.
Unisys
Ticker
ACN
ATO.PA
CSC
HP
IBM
IGTE
UIS
Stock Price
93.69
64.27
65.28
68.07
160.51
42.66
23.21
Market Cap
58.85
6.7B
9.21B
7.33B
158.64B
3.45B
1.16B
Average
OFFSHORE
Cognizant Technology Solutions
iGATE Corp.
Infosys
Syntel
Virtusa
Wipro
Ticker
CTSH
IGTE
INFY
SYNT
VRTU
WIT
Stock Price
62.39
42.66
35.08
51.73
41.38
13.32
Market Cap
38.03B
3.45B
40.09 B
4.33B
1.22B
32.69B
Average
VAR
CDW
ePlus
Insight Enterprises
Systemax
Ticker
CDW
PLUS
NSIT
SYX
Stock Price
37.24
86.93
28.52
12.22
Market Cap
6.42B
642M
1.13B
449M
Average
EV/Revenue
3.94
0.80
1.15
1.27
1.84
0.83
0.95
0.95
1.47
EV/Revenue
1.14
0.34
1.78
0.49
1.27
1.75
1.13
EV/Revenue
1.77
0.76
0.77
1.79
2.08
3.13
0.27
1.51
EV/Revenue
3.55
3.13
4.12
3.95
2.24
4.20
3.53
EV/Revenue
0.80
0.68
0.22
0.08
0.45
EV/EBITDA
35.57
7.92
9.24
12.18
9.61
8.52
6.26
11.13
12.55
EV/EBITDA
10.12
13.16
10.76
6.46
12.18
13.06
10.96
EV/EBITDA
11.17
7.14
7.36
4.22
7.92
15.63
4.29
8.25
EV/EBITDA
17.43
15.63
14.29
13.16
16.48
18.51
15.92
EV/EBITDA
10.99
8.98
6.41
19.49
11.47
Note: Stock Prices and Market Data as of March 31, 2015
Generation Equity Advisors, LLC
Page 8
IPO Spotlight
GoDaddy IPO values company at $4.5 billion
Web hosting company GoDaddy Inc. has priced its initial public offering at $20 per share, above
its previously indicated $17 to $19 per share range, valuing it at around $4.5 billion, including
debt, according to underwriting sources.
At this price, the IPO would raise $440 million. A GoDaddy spokesman did not immediately
respond to a request for comment.
Shares in GoDaddy started trading on Wednesday and listed on the New York Stock Exchange
under the symbol "GDDY."
GoDaddy, whose Super Bowl commercials once featured race car driver Danica Patrick and
super model Bar Rafaeli but have since been toned down its advertising, added more than 1.1
million customers last year.
The company was founded in 1997 and in 2011 was acquired by a private equity consortium led
by KKR & Co LP and Silver Lake Partners LP for $2.25 billion, including debt.
It has since expanded from its roots in internet domains to provide services to small and mediumsized businesses such as website building and web hosting.
GoDaddy's revenue has risen about 52 percent in last three years to about $1.4 billion and net
loss has narrowed to $143.3 million in 2014, from $279 million in 2012.
The company had about $1.3 billion in long term debt on an adjusted basis, as of Dec. 31.
It competes with Endurance, United Internet, Web.com and companies like Amazon.com Inc,
Google Inc and Microsoft Corp, which have recently entered the domain name registration
business.
GoDaddy filed for an IPO in 2006 and later withdrew it, citing unfavorable market conditions, the
same year Google Inc launched its free web hosting service, Google Page Creator.
Morgan Stanley, JP Morgan Securities and Citigroup were lead underwriters to the IPO.
Source: Reuters - http://www.reuters.com/article/2015/03/31/us-godaddy-ipo-exclusiveidUSKBN0MR2S220150331
http://www.godaddy.com
Generation Equity Advisors, LLC
Page 9
M&A Spotlight
All Covered Acquires IT Services Firm Preferred Networks Corporation
Foster City, Calif. and Ramsey, New Jersey - January 30, 2015 - All Covered, a division of Konica
Minolta Business Solutions U.S.A., Inc. (Konica Minolta) and one of the nation’s leading IT Services
companies, has acquired the assets of Preferred Networks Corporation of Atlanta. The
company’s clients will now be serviced by the All Covered IT Services division of KMBS, giving All
Covered a stronger foothold in the greater Atlanta area. The acquisition became official
January 1, 2015. Terms of the deal were undisclosed.
"We are excited to begin 2015 with news of this acquisition," says Todd Croteau, president of All
Covered. "Preferred Networks Corporation has developed an outstanding model of delivering
cloud technologies, data backup solutions and managed IT services to its customers in the
Atlanta area. The company’s mission and services align perfectly with All Covered’s
commitment to providing unmatched IT services to organizations across all industries.”
In addition to gaining Preferred Networks Corporation’s clients, All Covered also expands their
capabilities with a talented group of IT services professionals that understand the wide range of
technology demands facing businesses today. All of Preferred Networks Corporation’s
employees were retained in the acquisition, including David Webster, the company’s founder
and president.
Since its inception in 2007, Preferred Networks Corporation has built a reputation locally for
delivering top-of-the-line IT services to customers in the greater Atlanta area. Beginning with
contract-based managed IT services as its core offering, Preferred Networks Corporation added
cloud and desktop services in 2012. The company’s Infrastructure-as-a-Service (IaaS) cloud
offering focuses on hosted applications, backup and disaster recovery services, and Citrix
XenApp virtual apps that allow companies to reduce or eliminate large investments on IT
infrastructure and allow them to access data from anywhere in the world.
For more information, please go to: http://www.allcovered.com/about/news-press/all-coveredacquires-pnc#sthash.EWn3LetO.dpuf
www.allcovered.com
Generation Equity Advisors, LLC
Page 10
M&A Spotlight
Stefanini IT Solutions announces merger with IHM Engenharia
February 3, 2015 - Brazilian IT services multinational Stefanini has started off 2015 with its engines
on full-throttle. The company announced it is merging its operations with IHM Engenharia, a
Brazil-based multi-sector engineering services firm, according to a Stefanini statement.
The merger is aimed at increasing Stefanini's footprint in the industrial segment and follows the
company's credo of joining forces with or acquiring companies whose portfolio complements
that of Stefanini.
Transaction consideration was not disclosed. The transaction is still subject to regulatory
approvals.
At a year-end press conference in December, CEO Marco Stefanini underlined that during 2015
the company would be resuming the previous year's rate of mergers and acquisitions, both in
Brazil and abroad.
Founded in 1994, IHM Engineering operates in the segments of mining, metals, chemicals, paper,
agribusiness, food, automotive, power, and oil & gas, among others.
Initially, the focus will be on areas where the two companies have direct operations and offices
in Brazil. The partnership will then be successively extended to Latin America and other regions.
For IHM, the deal allows it to take advantage of Stefanini's comprehensive international clout in
order to expand outside Brazil.
For more than two years, Stefanini has been ranked by Brazilian think-tank Fundação Dom
Cabral as the most "globalized" Brazilian IT company and is the fourth most "international" IT
company in the country, according to the latest ranking.
Stefanini currently operates in 34 countries which generate some 40% of its revenues. In 2014, the
group collected revenues of 2.35bn reais (US$870mn), up 11% year-on-year. Similar growth is
expected for this year.
For more information, go to: www.stefanini.com and www.ihm.com.br
Generation Equity Advisors, LLC has advised Stefanini for buy-side M&A services in a previous
transaction.
M&A Spotlight
March 18, 2015 -- Ingram Micro Inc. (NYSE: IM) announced that it is further expanding its reach in
the fast-growing and high-value Latin American market with the acquisition of Tech Data's
Peruvian and Chilean businesses. The acquisition, which closed March 16th, is expected to add
more than $270 million annually to Ingram Micro's revenue and be slightly accretive to 2015
consolidated non-GAAP earnings per diluted share.
The acquisition complements Ingram Micro's existing operations in Peru and Chile and
immediately delivers increased reach and scale in the region, which has consistently been a top
performer for the company. In addition to delivering cost synergies through merger and
integration of the two businesses in each country, the acquisition is expected to drive further
strong growth in Technology Solutions, while increasing penetration into additional service
opportunities in Mobility, Supply Chain Solutions and Cloud.
"This acquisition is an excellent complement to our existing operations in Latin America," said
Alain Monié, Ingram Micro CEO. "Latin America is consistently one of our top performing regions
and the addition of these businesses to our current operations in Peru and Chile further reinforces
to our customers and vendors Ingram Micro's established position and commitment to providing
world class, supply-chain and technology services in emerging markets."
For more information, go to:
http://www.ingrammicro.com
http://www.techdata.com
http://phx.corporate-ir.net/phoenix.zhtml?c=98566&p=irol-newsArticle&ID=2026699
Generation Equity Advisors, LLC
Page 12
Generation Equity Advisors, LLC is an independent investment bank and M&A advisory firm
focused exclusively on the global Software, IT Services, Internet and Digital Media industry
sectors. We advise buyers and sellers of companies and efficiently execute transactions to
increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions
to date and have current relationships globally with companies as well as leading private equity
firms.
Please contact for information regarding this report or to inquire about an M&A transaction:
Aaron Solganick, CEO
[email protected]
Generation Equity Advisors, LLC
8560 W. Sunset Blvd, Suite 500
West Hollywood, CA 90069
(310) 684-3130
TechMediaMergers.com
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Page 13