Capgemini Acquires LiquidHub
Sunil Grover, Managing Partner
Enterprise Value (est. $m): ~$495m
EV / Revenue (est. 2017): ~2.0x
- On February 5, 2018, Capgemini announced its acquisition of LiquidHub, a digital customer engagement firm.
- The acquisition accelerates Capgemini’s geographic expansion into the US and demonstrates the company’s continued commitment to its strategy of executing tuck-in acquisitions that contribute up to 2% of incremental revenue.
European Expansion to the US Using M&A
- Headquartered in France, Capgemini is aiming to increase its North American presence using M&A. As a result, the company grew its North American revenues by roughly 31% year-over-year from 2014 to 2016. As of June 2017, North America comprises 30% of Capgemini’s revenue.
- Including LiquidHub, five of Capgemini’s nine most recent acquisitions targeted US-based companies, including its acquisition of iGate for $4.5 billion at a 3.5x LTM revenue multiple in 2015.
- Other European services providers have used similar strategies to break into North America in the past; Atos SE acquired Xerox’s IT Outsourcing business for $1.1 billion in 2015 and Publicis Groupe SA acquired Sapient Corporation for $3.7 billion in the same year.
A Case Study for Private Equity-driven Consolidation in IT Services
- LiquidHub’s exit is the result of a decade-long, private equity-backed roll-up strategy. Starting in 2007, the company raised $75 million in private equity investments to fund nine acquisitions in the last seven years. The resulting growth allowed LiquidHub to expand its services across several software ecosystems – Salesforce, Microsoft, Oracle, SAP, Mulesoft, and more.
- Another IT services provider that followed the same playbook is Appirio, a Salesforce implementation provider that raised $112 million, acquired seven companies from 2011 to 2014, and was acquired by Wipro for $500 million in 2016.
LiquidHub’s Transaction History
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