CRM Consulting Firms Are Hot M&A Targets
Over the last year, acquisitions of customer relationship management (CRM) services and integration companies have proved a common and crucial tactic of larger IT services companies looking to expand their capabilities in systems implementation and integration. There have been 50+ CRM integration and Salesforce consultancy acquisitions during the last twelve months, with five of them occurring in September 2018. Deals have covered a wide range of valuations, which is representative of the impressive scalability of these technology-enabled services businesses. Sustained growth and deal activity in this space is expected as major CRMs, like Salesforce and Microsoft Dynamics, continue to become ubiquitous.
More than size, Pharus understands that larger firms deeply value targets that provide them with:
- – EBU (large enterprise) customers
- – Ability to recruit, train and retain high quality consultants
- – High bill rates
- – More avant-garde services: Marketing Cloud, AI, Einstein, CPQ, etc. and less of the bread- and-butter sales cloud and service cloud
- – Vertical expertise and re-usable IP in those verticals
- – And of course: recurring revenue (or at least recurring relationships)
Most representative of these trends was the announcement on September 14 that Infosys, leader in next-generation digital services and consulting, would acquire Fluido, the Largest Salesforce Consulting Partner in Nordics, for €65 million ($76 million). Pharus served as exclusive advisors to Fluido in this transaction.
The largest of these transactions was the acquisition of Birlasoft (India), a Salesforce Platinum Partner with strong expertise in CRM advisory, execution and maintenance service, by KPIT Technologies Limited, a technology consulting, IT services & product engineering provider, for $251.4 million.
On December 29, 2017, eFuture Holding, an enterprise resource planning software solutions and services company, acquired Beijing Changyi Information Technologies Co., a provider of strategic consulting, business process reengineering and implementation services for ERP, DRP and CRM. The Transaction was valued at $96.8 million.
Among the notable buyers in the space is Cognizant, which acquired Salesforce specialists Advanced Technology Group on September 26, 2018 and SaaSForce on August 23, 2018. DXC Technology Company has also been active in the space, acquiring System Partners on September 26. On March 22, 2018, Ernst & Young acquired Sonoma Partners, which offers strategy, design, development, and implementation of Microsoft Dynamics CRM and Salesforce CRM solutions.