TBP Spotlight – Cognizant Acquires Advanced Technology Group


Cognizant Acquires Advanced Technology Group

Deal Financials

Transaction Value ($m): Undisclosed

Transaction Overview

  • On September 18, 2018, Cognizant (NasdaqGS:CTSH) announced its acquisition of Advanced Technology Group (ATG), a Gold Salesforce Consulting Partner specialized in quote-to-cash (QTC) implementation services.

ATG and the Evolving M&A Landscape in the QTC Space

  • The Salesforce partner ecosystem has been driving heavy transaction activity among both IT services providers and independent software vendors (ISVs) in the QTC space.
  • In August 2015, ATG partnered with Force.com-native CPQ platform provider SteelBrick, which Salesforce acquired half a year later for $300 million.
  • In February 2016, ATG raised convertible debt financing from Salesforce Ventures’ SI Trailblazer Fund as one of the fund’s first three investments. Since then, Salesforce has also launched a $100 million fund focused on Canadian companies; its initial investments include OSF Commerce, Tulip, Traction Guest, and Tier1CRM.
  • The pool of independent, QTC-focused Salesforce Consulting Partners continues to shrink, due to ATG’s exit as well as the consolidative M&A strategy of Simplus, which acquired 3 such companies in the past 2 years.
  • One of the largest ISVs in the Salesforce ecosystem, QTC software provider Apttus, was acquired by Thoma Bravo 2 weeks ago. Outside the ecosystem, CallidusCloud was acquired by SAP for $2.4 billion in January 2018.

IT Services Giants Turn Their Attention to Salesforce

  • Since 2016, large IT services companies have become increasingly acquisitive in the Salesforce ecosystem, and independent Salesforce Consulting Partners with over $30 million in revenue have become increasingly scarce.
  • In addition to ATG, Cognizant acquired SaaSFocus, a Platinum Salesforce Partner, less than a month ago. Last week, Infosys also acquired Finnish Salesforce services provider FLUIDO for $76 million to strengthen its European presence.
  • Persistent Systems acquired one Salesforce Consulting Partner in each of the past two years: PARX Consulting in 2017 for $16 million, or roughly 2x revenue; and Australia-based PRM Cloud Solutions in 2016.
  • In 2017, Capgemini acquired two Commerce Cloud-focused Salesforce services providers, Itelios and Lyons Consulting Group. Both were acquired for undisclosed sums, but the latter’s 2016 revenue was $45 million according to Inc. 5000.
  • In 2016, Appirio was acquired by Wipro for $500 million, or 2.6x revenue, in one of the largest exits in the ecosystem.

Recent Salesforce Consulting Partner Transactions

Salesforce Consulting Partner Transactions table

About True Blue Partners, LLC
True Blue Partners is a boutique M&A advisory firm that serves lower mid-market enterprise software, service and solutions companies. It brings the rigorous strategic and financial perspective of bulge bracket firms with a company building approach and a steadfast partnership that only an independent boutique firm can deliver. For more information please visit www.truebluepartners.com or email us at info @ truebluepartners . com.

TBP was NOT an advisor to this transaction.