Market Commentary

  • The strong wave of consolidation in the second half of 2018 has continued into Q1 2019
  • The rising adoption of cloud-based services is one of the key factors underpinning market growth in the near-term, with various companies adopting cloud computing solutions in order to reduce costs, and achieve flexibility and scalability
  • The hyperscale data center market is set to grow from $20 billion in 2018 to over $65 billion by 2025, driven by rising demand for big data and cloud computing solutions1
  • Global IT Services and Webhosting peers outperformed global equity markets on average, whilst performance of other sub-sectors was more mixed
  • Significant M&A activity in the Managed Services sub-sector with a number of companies due to come to market

Hosting and Managed Services Taxonomy

Web Hosting

Refers to a service in which a vendor offers the housing of business-to-business or business-to-consumer e-commerce websites via vendor-owned shared or dedicated servers and applications for enterprises at the provider-controlled facilities

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Managed Services

Refers to the delivery of network, application, system and e-management services across a network to multiple enterprises, using a “pay as you go” pricing model

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IT Outsourcing

Refers to the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes

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Selected Recent HW Hosting and Managed Services Transactions

screen_shot_2019-05-03_at_12.43.03_pm.pngProvider of mass hosting services for SMEs, including web hosting, domains, e-commerce and application solutions with leading positions in Belgium and Denmark and a growing presence in the Netherlands, Sweden and Switzerland

 

 

 

 

screen_shot_2019-05-03_at_12.44.05_pm.pngProvider of services allowing SMEs to move their IT infrastructure and operations into the cloud, as well as providing end user support and consulting as part of a full-service IT offering

 

 

 

 

screen_shot_2019-05-03_at_12.44.34_pm.pngProvider of web domains, shared web hosting and value-added services with leading positions in Sweden and the Czech Republic, and presence in Norway, Serbia, Slovakia, Spain, Netherlands, Germany and the UK

 

 

 

 

screen_shot_2019-05-03_at_12.45.40_pm.pngProvider of managed technology services with national scale in the US and the capability to design, deploy and support technology solutions from cable to cloud

 

 

 

 

screen_shot_2019-05-03_at_12.46.15_pm.pngProvider of SME focused hosting and cloud solutions, including domains website hosting, email for smaller customers and managed servers and applications for larger customers

 

 

 

 

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Provider of managed hosting and cloud solutions specialised in managed cloud hosting, desktop-as-a-service, security and connectivity

Market Observations

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Select Hosting and Managed Services M&A Transactions

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Combell’s Acquisition of iXL Hosting3,4

  • Netherlands-based provider of web hosting, domain names and servers services
  • iXL Hosting has more than 8,000 customers
  • The acquisition will enable Combell to strengthen its position in the Dutch market and leverage iXL’s services and expertise across the combined customer base

 

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LINKBYNET’s Acquisition of Objectif Libre3

  • France-based specialist in consulting, training and integration of OpenStack, Ansible and Kubernetes technologies
  • Objectif Libre has experienced constant growth since 2009
  • The acquisition further strengthens LINKBYNET’s organic growth and is part of the development strategy of its consulting division, addressing the Cloud and DevOps transformation markets

 

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DXC Technology’s Acquisition of EG’s Service Business3​

  • Denmark-based provider of information technology solutions to companies in production, construction, retail, trade and transport, government, professional services and utility sectors
  • The business employs c. 570 people across the Nordics
  • The acquisition strengthens DXC’s position in the Microsoft Dynamics 365 systems integration segment

 

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Tucow’s Acquisition of Ascio Technologies3

  • Denmark-based provider of domain registration and management solutions
  • Ascio manages a total of more than two million domain names and is responsible for the provision of Domain Portfolio Management services indirectly through more than 600 domain partners
  • The acquisition will enable Tucows to add more than two million domains under management and approximately 500 active resellers, while enabling Ascio to focus on its resellers

 

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Candidator DGC’s Acquisition of Solid Park3

  • Sweden-based provider of IT operations to SMEs in the private and public sectors, as well as offering advanced consulting services within system development, system management and IT infrastructure
  • Solid Park AB has workforce of 200 employees
  • The transaction will strengthen Candidator DGC’s position in Sweden and further increase Solid Park’s service offering

IT & Tech-Enabled Services – Trading Comparables

Valuation2

As of March 31, 2019 ($ in millions)

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IT & Tech-Enabled Services – Transaction Activity

Select Recent M&A Transactions*3,4

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*Conversion to USD based on FX rate as of announcement date

IT & Tech-Enabled Services – Representative Landscape

Representative IT & Tech-Enabled Services Providers

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1. Global Market Insights. 

2. Factset; market data as of 31 March 2019

3. Merger Market

4. HW proprietary transaction information

 

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