Cognizant Acquires Advanced Technology Group

Deal Financials

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

TBP was NOT an advisor to this transaction.