Sectorwatch: Software Engineering - 7 Mile Advisors - August 2021
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7 Mile Advisors Sectorwatch: Software Engineering August 2021
Software Engineering
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in
conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document.
All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 2
7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treated
as confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error.Overview DASHBOARD
• Summary metrics on the sector
• Commentary on market momentum by comparing the
most recent 12-month performance against the last 3-
year averages.
PUBLIC BASKET PERFORMANCE
• Summary valuation and operating metrics for a basket of
We advise on M&A and private capital transactions and provide market comparable public companies.
assessments and benchmarking. As a close-knit team with a long history
together and a laser focus on our target markets, we help our clients sell
their companies, raise capital, grow through acquisitions, and evaluate new
markets. VALUATION COMPARISON
We publish our sectorwatch, a review of M&A and operational trends in • Graphical, detailed comparison of valuation multiples for
the industries we focus. the public basket.
RECENT DEALS
• The most recently announced deals in the sectorDashboard
1 - year revenue growth compared to revenue growth average for last 3 years - Current revenue
growth rate exceeds the average of the last 3 years by this amount, indicating that market
momentum is increasing
4Public Basket Overview
Asia
Europe
Software
Engineering
United States
South America
5Public Basket
Tata Consultancy Services 186,718 6,869 23,205 9.0% 47.2% 29.6% 8.0x 27.2x 453,540 51
Capgemini 44,409 2,875 20,239 15.5% 26.3% 14.2% 2.2x 15.4x 265,073 76
Infosys 95,790 4,259 14,223 11.4% 34.9% 29.9% 6.7x 22.5x 242,371 59
Wipro 45,342 2,139 8,845 6.6% 31.5% 24.2% 5.1x 21.2x 180,000 49
EPAM Systems 34,783 671 3,038 21.3% 34.4% 22.1% 11.4x 51.9x 36,739 83
Globant 12,961 146 1,015 39.1% 37.9% 14.4% 12.8x 88.8x 12,333 82
Persistent Systems 3,268 114 600 18.8% - 19.1% 5.4x 28.6x 10,632 56
Endava 8,092 98 526 19.6% 33.6% 18.6% 15.4x 82.5x 6,624 79
R Systems International 270 24 133 18.3% 34.2% 17.8% 2.0x 11.4x 1,994 67
47,959 1,911 7,980 17.7% 35.0% 21.1% 7.7x 38.8x 134,367 67
34,783 671 3,038 18.3% 34.3% 19.1% 6.7x 27.2x 36,739 67
share price as of 31Aug21
6Public Basket
7Operational Metrics
8Operational Metrics
9Valuation
10Valuation
11Valuation
EBITDA(x)
LTM GP%
EBITDA(x)
LTM RGR%
11x 15x 21x 22x 27x 29x 52x 83x 89x
11x 15x 21x 22x 27x 29x 52x 83x 89x
EBITDA(x) LTM GP%
EBITDA(x) LTM RGR%
12Recent Transactions
31-Aug-21 BCA Technologies AutoQuotes - - - -
26-Aug-21 Awave Intracto - - - -
12-Aug-21 Centare Bain Capital Double Impact - - - -
04-Aug-21 Proximity Costa Rica 10Pearls - - - -
02-Aug-21 Bounteous New Mountain Capital - - - -
29-Jul-21 Foreach Intracto - - - -
28-Jul-21 Stermedia Euvic - - - -
22-Jul-21 Logiway Lojelis - - - -
21-Jul-21 Drud Technology Fruition - - - -
09-Jul-21 Little Big Smala Humans4help - - - -
06-Jul-21 Devsar RCN - - - -
01-Jul-21 Greyhound Technologies TAZ Networks - - - -
23-Jun-21 Aptera (Software) Core Business Technology Solutions - - - -
22-Jun-21 Primavera BSS Ekon - - - -
21-Jun-21 Hybrid (Media Company) LDC 18.3 - - -
17-Jun-21 Cheeky Monkey Creative BGF - - - -
15-Jun-21 Opal Wave Solutions Horizon Capital (London) - - - -
14-Jun-21 Pixan Apps Zigatta - - - -
14-Jun-21 Skyrise.Tech Etteplan - - - -
02-Jun-21 J S Walker and Company Liventus - - - -
02-Jun-21 StreamSoft Development Applied Driving Techniques - - - -
25-May-21 Solv (Norway) IK Investment Partners - - - -
20-May-21 Moovity Technologies Syntonize - - - -
12-May-21 9Fold HungerRush - - - -
12-May-21 OSF Digital Delta-v Capital 43.0 - - -
10-May-21 Evolve Retail The Digital Maze - - - -
04-May-21 Business Automatics 1World Online - - - -
04-May-21 Hyperneph Software Catenae Innovation 0.4 - - -
03-May-21 Löwenstark Group ARCUS Capital - - - -
1314
Public Basket Tata Consultancy Services
The company was founded in 1968 and has its headquarters in Mumbai. The firm provides end-to-end IT and consulting services
across the globe and has over 200 offices in 50 countries and 183 solution centers in 19 countries. The company employs over
430,000 staff, which makes it one of the largest IT employers in the world. TCS derives a significant portion of its revenue from the
North American market and the banking, financial services, and insurance industry.
15Public Basket Tata Consultancy Services
Company Name Date Deal Synopsis
The company, a subsidiary of Deutsche Bank (ETR: DBK), was acquired by Tata Consultancy Services (NSE: TCS) for an undisclosed amount
Postbank Systems 01-Jan-21
on January 1, 2021.
The company, a subsidiary of Prudential Financial (NYS: PRU), reached a definitive agreement to be acquired by Tata Consultancy Services
(NSE: TCS) for an undisclosed amount on November 12, 2020. The acquisition will deepen TCS's relationship with PFI and gives a new
Pramerica Systems 12-Nov-20
delivery capability in Ireland with specialized expertise, that significantly strengthens its ability to meet the growth and transformation needs of
customers globally.
16Public Basket Capgemini
The firm has over 450 offices globally, with more than half of its employees based in India. Capgemini provides services related to IT
consulting, infrastructure management, and business process outsourcing.
17Public Basket Capgemini
Company Name Date Deal Synopsis
The company reached a definitive agreement to be acquired by Capgemini (PAR: CAP) for AUD 233 million on July 19, 2021. The acquisition
Empired 19-Jul-21
strengthens Capgemini's client portfolio across key industries, notably in Mining, Utilities and Government.
The company raised EUR 100 million of Series B venture funding in a deal led by Groupe Renault (France) and EQT Ventures on July 6, 2021.
Verkor 06-Jul-21 Schneider Electric, Capgemini, Arkema and 6 other investors also participated in the round. The funds will be used by the company to
support the expansion of Verkor and accelerate the construction of the VIC (Verkor Innovation Center).
18Public Basket Infosys
The company was founded in 1981, employs more than 200,000 staff, and serves clients in over 40 countries. Infosys provides
myriad services, including business process outsourcing, IT outsourcing, consulting and systems integration, among many others.
The firm serves more than 20 industries ranging from financial services and healthcare to manufacturing and consumer packaged
retail.
19Public Basket Infosys
Company Name Date Deal Synopsis
Daimler (IT Assets in Germany) 12-Apr-21 The IT Assets in Germany of Daimler were acquired by Infosys (NSE: INFY) for an undisclosed amount on April 12, 2021.
ideaForge 11-Feb-21 The company received $1 million of financing from Infosys on an undisclosed date.
20Public Basket Wipro
The firm employs more than 170,000 staff, operates in more than 50 countries, and serves six primary business segments composed
of 27 industry verticals.
21Public Basket Wipro
Company Name Date Deal Synopsis
The company reached a definitive agreement to receive an undisclosed amount of financing from Wipro on June 2, 2021. It plans to close
Squadcast 02-Jun-21
the round by June 30, 2021.
The company, a subsidiary of Metro (Düsseldorf) (ETR : B4B), was acquired by Wipro (BOM: 507685) for an undisclosed amount on April 2,
Metro Systems Romania 02-Apr-21
2021.
22Public Basket EPAM Systems
The company offers six main services: Software Product Development, Custom Application Development, Application Testing,
Enterprise Application Platforms, Application Maintenance, and Support and Infrastructure Management. The company focuses on
innovative and scalable software solutions. The company uses industry standard and custom developed technology, tools, and
platforms to deliver results to handle business challenges. The company primarily offers their solutions in the following industries:
financial services, travel and consumer, software and hi-tech, life sciences and healthcare. The majority of revenue is generated from
North American clients.
23Public Basket EPAM Systems
Company Name Date Deal Synopsis
The company was acquired by EPAM Systems (NYS: EPAM) for an undisclosed amount on May 11, 2021. The acquisition enables EPAM
Just-BI 11-May-21
Systems to expand its portfolio of data and analytics services.
White-Hat 05-May-21 The company was acquired by EPAM Systems (NYS: EPAM) for an undisclosed amount on May 5, 2021.
24Public Basket Globant
It creates platforms which are powered by native digital technology, better known as digital journeys. The digital journey
incorporates various software products, mobile apps and sensors that assist its clients in knowing its end user's behavioral pattern.
The key aspects of the digital journey are stay relevant, discover and build. The stay relevant helps its clients in staying abreast of the
developments in its industry and taking preemptive measures. The discover conceives digital journeys for the users based on
consumer behaviors and technologies and the build creates each digital journey leveraging the work of its studios. The company's
revenue is primarily generated by its technology services in the United States.
25Public Basket Globant
Company Name Date Deal Synopsis
The company raised $12 million of Series B venture funding from Telefónica Tech Ventures, Globant and Bridge One on July 12, 2021. IDB
VU Security 12-Jul-21 Lab., NXTP Ventures and Agrega Partners also participated in the round. The funds will be used to hire developers across Europe and in the
U.S.
The company was acquired by Globant (NYS: GLOB) for an undisclosed amount on July 8, 2021. Globant has an option to acquire
Walmeric Soluciones 08-Jul-21
remaining minority stake in three year time.
26Public Basket Persistent Systems
Its solutions include cloud life cycle management, Internet of Things, unified endpoint management, endpoint detection and
response, and Big Data analytics. The firm also offers product engineering services, platform-based cloud solutions, and Internet
Protocol-based products. Most of the firm's revenue gets derived from the Technology Services segment.
27Public Basket Persistent Systems
Company Name Date Deal Synopsis
Sureline Systems 20-May-21 The company reached a definitive agreement to be acquired by Persistent Systems (NSE: PERSISTENT) for $2.5 million on May 20, 2021.
The company was acquired by Persistent Systems (NSE: PERSISTENT) for an undisclosed amount on November 7, 2020. The acquisition
further strengthens Persistent's ability to provide enterprise integration strategy & advisory services to guide clients with their integration
CAPIOT Software 07-Nov-20
strategy, platform choice, and roadmap to meet business goals and also managed integration services to support changing business needs
and innovation.
28Public Basket Endava
It offers various services such as Agile Transformation, through which the company identify, define, and implement the mix of
process, technology, and culture. It also provides Digital Evolution and Automation, Test Automation and Engineering, Cloud,
Architecture, Software Engineering, and others. The company offers its services to various industries such as Finance, Retail and
Consumer Goods, Telecommunication, Media, and Technology, Insurance and Healthcare, and others.
29Public Basket Endava
Company Name Date Deal Synopsis
Levvel 01-Apr-21 The company was acquired by Endava (NYS: DAVA), a subsidiary of Concise, for an undisclosed amount on April 1, 2021.
The company, a subsidiary of RealNetworks (NAS: RNWK) was acquired b y Endava (NYS: DAVA), a subsidiary of Concise, for an undisclosed
Five (Croatia) 04-Mar-21 amount on March 4, 2021. With this acquisition, Endava increases its capacity in the ideation, design and delivery of intelligent digital
experiences and enhances its capabilities in digital product strategy and performance optimization services.
30Public Basket R Systems International
It is organized into two business segments Information technology services and products and Business process outsourcing
services. The company serves IT services and solutions to telecom and digital media, healthcare, manufacturing and logistics,
government services and banking and finance industries.
31Public Basket R Systems International
Company Name Date Deal Synopsis
The company was acquired by R Systems International (BOM: 532735) through its subsidiary, R Systems, Inc., on February 4, 2019 for an
undisclosed amount. This acquisition will help R Systems International to use facilities in Chicago as Center of Excellence (CoE) to
Innovizant 04-Feb-19
strengthen their on-shore/near shore delivery capabilities to serve US Central and East Coast clients and our commitment to build US-based
technical resource pool.
IBIZ Consulting Services 30-Apr-15 The company was acquired by R Systems International (BOM: 532735) for an undisclosed amount on April 30, 2015.
32Leroy Davis, Partner 704.899.5962 leroy@7mileadvisors.com
Tripp Davis, Partner 704.899.5762 tripp@7mileadvisors.com
Andy Johnston, Partner 704.899.5961 andy@7mileadvisors.com
Contact Info Simon Baitler, Executive Managing Director
John Cooper, Managing Director
310.829.1635
704.973.3996
simon.baitler@7mileadvisors.com
john@7mileadvisors.com
Mark Landry, Managing Director 561.972.0609 mark@7mileadvisors.com
Horacio Yenaropulos, Managing Director (+) 54.261.4617300 horacio@7mileadvisors.com
Tim Frye, Senior Director 704.973.3994 tim@7mileadvisors.com
Kristina Sergueeva, Director 704.899.5149 kristina@7mileadvisors.com
Ben Garber, Vice President 412.626.7898 ben.garber@7mileadvisors.com
Garth Martin, Vice President 704.973.3997 garth.martin@7mileadvisors.com
Nicholas Prendergast, Vice President 704.973.3995 nicholas@7mileadvisors.com
Sydney Scadden, Vice President 704.973.3998 sydney@7mileadvisors.com
Ariail Barker, Director, Sales & Marketing 704.981.2908 ariail@7mileadvisors.com
Ben Bruggeworth, VP, Business Development 704.365.8859 ben.bruggeworth@7mileadvisors.com
Steve Sypek, VP, Business Development 704.414.8736 steve.sypek@7mileadvisors.com
As a close-knit team with a long history together and Emily Halstenberg, Marketing & Sales Manager 704.409.9912 emily@7mileadvisors.com
a laser focus on our target markets, we help our
clients sell their companies, raise capital, grow Alexis Papa, Marketing & Sales Coordinator 704.414.8732 lexi.papa@7mileadvisors.com
through acquisitions, and evaluate new markets. Nic Anderko, Analyst, Business Development 704.398.3991 nic.anderko@7mileadvisors.com
Securities offered through 7M Securities LLC.
Steve Buffington, Senior Associate 704.960.1828 steve@7mileadvisors.com
Ilia Ulianchuk, Senior Associate 704.414.8743 ilia@7mileadvisors.com
Nic Anderle, Analyst 704.826.7492 nic.anderle@7mileadvisors.com
Adam Alderfer, Analyst 704.644.1917 adam@7mileadvisors.com
Lucas Cerbelli, Analyst 704.336.0118 lucas@7mileadvisors.com
Tanner Lange, Analyst 704.672.0611 tanner.lange@7mileadvisors/com
Trent McCauley, Analyst 704.644.1916 trent.mccauley@7mileadvisors.com
Kevin Postigo, Analyst 704.912.4903 Kevin.postigo@7mileadvisors.com
Robin Siegel, Analyst 704.285.8173 robin@7mileadvisors.com
Conor Smith, Analyst 704.855.2134 conor.smith@7mileadvisors.comYou can also read
