AUGUST 2020

The M&A Engine


Accenture Overview 03 ACCENTURE
OVERVIEW
• Accenture is a bellwether • Inorganic strategies
stock in IT services
Accenture Inorganic
• With an Enterprise Value
Strategy 08 of >$100Bn, Accenture
is one of the highest
valued IT services • Compared to other top IT
company – in the last 5
years, it has more than
doubled its value while
M&A Analysis 16 peers such as TCS has
only grown by ~50%
• Accenture is perceived
as a high-end services
Predicting Segments provider due to its
Through M&A Activity 21 consulting background
and forward-looking
business mix, including
the following segments: • The tuck-in M&A strategy
– Cloud SI - 16%
– Digital Agency – 15%
– Cyber Security – 9%
2
HOW ACCENTURE HAS
INORGANIC
BECOME AN
ANALYSIS OF M&A FORECASTING M&A BY
STRATEGY ACTIVITY SEGMENT
ASPIRATIONAL BUYER
• Commercial Aspect: • By Rationale: • Accenture is often the
include acquisitions, – Higher Valuation – Capability Acquisition: first mover to acquire the
joint ventures, and – Front loaded deal 61% newer segments which is
investments through structure – Others: 39% then followed by its peers
Accenture Ventures – Upfront cash • By Segment: • Accelerating Segments
payment – Product Engineering: – Cloud infrastructure
– Higher salaries for – Cyber security
services companies, 16%
principals – Digital marketing
Accenture is the one of – Marketing Services:
– Design agencies
the biggest acquirer • Intangible Aspect: 15%
spending almost $1.2Bn – Speed – Digital Agency: 15% • Sustaining Segments
on acquisitions. It has – Certainty – Others: 54% – Cloud SI
done 110 acquisitions – Brand name – Analytics
• By Global Reach:
over the last 5 years – Marketing services
– North America: 42%
while the next closest – Product engineering
– Europe: 41%
acquirer only did ~25% – Growth Markets: 17%
of that number
has supported value
creation by –
1. Higher growth (~2%
YoY)
2. Accelerating the
business mix change
01.
Accenture Overview
 One Of The Leading Technology And Consulting Vendor To Global Enterprises
LOCATIONS OVERVIEW

• HQ: Dublin, Ireland • One of the leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and
• Other Locations: operations, with digital capabilities across all of these services
50+ countries • With experience and capabilities across more than 40 industries – the company is powered by one of world’s largest network of advanced technology
and intelligent operations centers

# OF EMPLOYEES
SERVICES
• ~500,000
1. Strategy and Consulting
• One of the leaders in strategy,
KEY EXECUTIVES
industry experts, enterprise
• Julie Sweet (CEO) function practitioners, business
• KC McClure (CFO) intelligence professionals,
designers, data scientists, and
many other specialized skills are
CLIENTS
brought together to co-create
• 91 of the Fortune Global clients’ unique path to
100 transformation
• More than three-quarters of
the Fortune Global 500 INDUSTRY GROUPS
• Communication, Media & Technology
AWARDS • Financial Services
• Health and Public Services
• Fortune’s Global 500 • Products1
• Forbes’ Global 2000
• Energy, Utilities and Resources
2. Interactive 3. Technology 4. Operations
• Accenture Interactive • Accelerates enterprise • Reinvents organization with
reimagines business through transformation through intelligent operating models
experience capabilities such as intelligent enabled by SynOps - human-
• From idea to execution, platform services, technology machine operating engine
Accenture Interactive designs, innovation, technology • SynOps is powered by data,
builds, communicates and runs consulting, security, and applied intelligence, digital
comprehensive experiences industry X.O technologies, and exceptional
from start to finish talent providing tangible
business outcomes
KEY HIGHLIGHTS
• Holds a top position in the Technology Ecosystem via strategic relationships with alliance partners,
including leading technology providers such as Microsoft, SAP, Oracle, Cisco, EMC, Salesforce
• 98 of Accenture’s top 100 clients have been with them for at least 10 years because it is committed to
create innovative solutions for its clients
• Global Delivery Network

1. Products include consumer goods, retail, & travel services, industrial and life science
4 2. Source: Accenture Website
 Accenture Has Doubled Revenue While Maintaining Mid Teens EBITDA Margins
(FYE August; Fig in $Mn) FY10 FY15 FY16 FY17 FY18 FY19
Revenue 21,550 31,047 32,882 36,176 40,992 43,215
Revenue Growth % (over prior year) 0.1% 3.5% 5.9% 10.0% 13.3% 5.4%
Revenue (Digital, Cloud, and Security Services) NA NA NA 49.7% 56.1% 64.9%
Gross Profit 7,250 9,809 10,277 11,071 12,493 13,314
Gross Margin % 33.6% 31.6% 31.3% 30.6% 30.5% 30.8%
EBITDA 3,193 4,911 5,256 5,655 6,434 6,923
EBITDA Margin % 4.8% 15.8% 16.0% 15.6% 15.7% 16.0%

Revenue by Operating Group Revenue by Services Revenue by Geographic Region

18% 18% 21% 12% 20%

21%

46% 44% 44% 46%

FY10 FY19 FY10 54% FY19 FY10 FY19
23% 23% 21% 56%
21%
44%
34%
17% 17%

Communication Media & Tech.

Consulting North America
Financial Services
Outsourcing Europe
Health and Public Service
Growth Markets (APAC)
Products
Resources

5 Source: CapitalIQ, Accenture FY10, FY15, FY16, FY17 ,FY18 and FY19 Annual Report
 Market Cap Has Increased By $72Bn Over The Last 10 Years, While Paying Out ~$12Bn in Dividends
Valuation Matrix
12 Months Fiscal
Numbers in $Mn; as of July-10-2020 Amount Particulars FY18 FY19 FY20
Period, Numbers FY10 FY15 FY18 FY19 FY20
in $Mn
Market Cap 139,524 TEV1/Revenue 2.5x 2.6x 2.7x

TEV 137,059
TEV1/EBITDA 15.8x 16.3x 14.9x
Dividend 710 1,276 1,671 1,861 1,526
Debt 3,512

Cash 6,445 P/E 26.7x 25.8x 25.3x

Share Price Growth SHARE PRICE

500 PERIOD %
Accenture plc (NYSE:ACN) - Share Pricing
400 NASDAQ Composite Index (^COMP) - Index Value 1m 10.7%
300 S&P 500 (^SPX) - Index Value
3m 24.1%
200
6m 2.5%
100
1yr 15.9%
0
5yr 118.5%
-100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10yr 435.9%

1. EV is calculated with share price as of August 31st of the FY

6 2. Source: CapitalIQ
 Accenture Leads The Pack on Revenue, Market Cap and EV/EBITDA
By Revenue By Market Cap By EV/EBITDA

Sr No. Company $Mn Sr No. Company $Mn Sr No. Company Multiple

01. 76,536 01. 160,455 01. 19.1x

02. 44,547 02. 137,059 02. 16.7x

03. 21,230 03. 110,816 03. 13.0x

04. 20,900 04. 41,684 04. 11.3x

05. 19,577 05. 29,000 05. 9.1x

06. 16,898 06. 21,798 06. 8.9x

07. 15,980 07. 21,253 07. 8.4x

08. 12,780 08. 20,785 08. 8.2x

09. 9,936 09. 19,331 09. 8.1x

10. 9,020 10. 13,650 10. 7.8x

7 Source: CapitalIQ as of July-14-2020

02.
Accenture Inorganic
Strategy
 Accenture Has Three Inorganic Go-To-Market Levers

MERGERS AND ACQUISITIONS

• Accenture has acquired 160+ companies in a span of 10 years, making it a one of the leaders in 01
digital capabilities across the globe

INVESTMENTS: ACCENTURE VENTURES

• A branch of Accenture, invests into companies to form alliances and expand Accenture’s client pool as
Inorganic well as geographical coverage 02
Go-to-market Strategy • Is predominantly interested in investing into new business models such as Next-Gen Technologies,
Blockchain, and Cloud

JOINT VENTURES
• Joint Ventures have been used to further enhance key relationships 03
• Accenture has entered into joint ventures with strategically important partners such as Microsoft

9
 Accenture Ventures Is The Venture Capital Arm Of Accenture
Investments Through Accenture Ventures Key Investments
• Launched in 2015, Accenture Ventures acts as a bridge to the global innovation
ecosystem by bringing Accenture’s clients together with best-in-class, enterprise-relevant Value
Company Country Segment Description
startups to unlock their growth potential and accelerate digital transformation ($Mn)
• Accenture Ventures is a corporate venture capital arm of Accenture that prefers to invest
Enhances Accenture’s
in growth-stage firms that create innovative enterprise technologies using an open
Technology capabilities in financial services
innovation approach Canada 17
Services innovations, modernization and
• Accenture Ventures has 50+ partners, 30+ start-up investments, and is engaged in transformation
5000+ start ups
Innovates solutions for banks,
Technology
USA 60 brokerages and infrastructure
Key Capabilities Acquired By Accenture Ventures Services
providers
Future
AI + Block Intelligent Cyber Industry Health
Work Boosts personalization services
Big Data chain Automation security X.0 Tech
Force USA NA Software to global clients as customer
experiences grows worldwide

Amount Invested ($Mn)* Geographical Split

Extends Accenture’s computer
897 vision and product recognition
6% China NA Analytics - AI
capabilities and accelerates
Asia / Pacific growth in China
278 25% Europe
42 North America Using data analytics, this deal
helps Accenture prepare its
69% UK NA Analytics - AI
Asia / Pacific Europe North clients for global security
America challenges

*as of 01 - July - 2020

10 Source: CapitalIQ, Merger Market, Accenture Website
 Alliances Are Created To Enhance Accenture’s Core Competencies And Strategic Relationships

JV Company Holding Segment Description Key Metrics

A Microsoft-focused IT services company, enhances

• 3,900 employees
NA Technology Services Accenture’s capabilities in financial services
• ~700Mn Revenue
innovations, modernization and transformation

$196Mn The joint venture accelerates the development of

• 1,200 employees
Accenture: 40% ; Cloud Infra Duck Creek products and technologies, leveraging
• ~25Mn Revenue
Apax Partners: 60% advanced digital and cloud technology

Accenture Back office and Vertical Specific - The JV will support UniCredit’s accounts-receivable,
NA • 79 employees
Administration Services SPA Financial Services accounts-payable and asset-management functions

11 Source: CapitalIQ
 M&A Is The Center Of Accenture’s Inorganic Growth
Accenture’s Acquisition Strategy Focuses To Do Three Things

01 02 03

SCALE GROWING AREAS IN THE MARKET
Accenture builds new capabilities that tap
into large addressable markets. For
example, in 2019 Accenture did about six
acquisitions in technology, three of them
around the Intelligent Platform Services
ADD NEW CAPABILITIES
Accenture made ~20 acquisitions in the Digital,
Cloud, and Security Services space (The New) in
2019 alone, demonstrating the company’s
commitment to become a one of the market-
leaders in these new capabilities (Revenues
from “The New” approximated to $28Bn1 -
approximately 65% of the new bookings in
2019)
DEEPEN INDUSTRY AND FUNCTIONAL
EXPERTISE
Accenture is constantly looking to further
expand in areas that the company has
historically been strong at. For example,
Accenture made 4 financial services-related
acquisitions in 2019, a sector that the
company already has a strong foothold in

Revenue of “The NEW” # of Acquisitions v/s Headcount Investment in Acquisitions

The New includes Digital, Cloud and Security Services

Segment Revenue ($Bn) % of Revenue Year Block # of Acquisitions Headcount Year Amount ($Mn)

Block 1 (FY10 - FY13) 26 5,372 FY19 1,200

Digital 21 49%
Block 2 (FY14 - FY16) 45 3,590 FY18 658
Cloud 11 25%
Block 3 (FY17-FY20) 93 10,241 FY17 1,700
Security 2.5 6%
Total (FY10 – FY20) 164 19,203 Total 3,558

1. Net of estimated overlap

12 2. Source: Accenture FY 19 Earnings Report, Merger Market
 The Closest Competitor Has Only Completed ~25% Of Accenture’s Number Of Acquisitions

# of Acquisitions
110

31%

42%

8%

9% 10%

27 25
Accenture 21
16
Cognizant 13 11 11 10 9 9
DXC technologies 3
IBM
Accenture Cognizant DXC IBM NTT CGI Tech Wipro HCL Capgemini Infosys TCS
Others Technologies Data Mahindra

Source: Merger Market

13 Others include NTT Data, CGI, Tech Mahindra, Wipro, HCL, Capgemini, Infosys and TCS
 Forward Thinking Tuck-In Acquisition Strategy Has Been Behind Accenture’s Strong Value Creation
These three companies abide to different acquisition strategies - Accenture follows Tuck-In Acquisition strategy, TCS follows a Non-Acquisitive strategy, and Capgemini follows a
Transformational M&A strategy. A comparison between their growth shows that Accenture’s strategy is helping it create value.

Particulars

Founded 1989 1968 1967

# of Employees ~500,000 448,464 ~270,000
FY15 FY20 ∆ FY15 FY20 ∆ FY14 FY19 ∆

Market Cap1 (USD Mn) 56,098 133,711 138.4% 79,268 113,973 43.8% 11,429 20,439 78.8%

Total Enterprise Value1 (USD Mn) 52,185 131,713 152.4% 77,497 107,036 38.1% 11,305 23,464 107.6%

Revenue Growth (over prior year) 3.5% 4.4% 0.9% 15.7% 7.2% (8.5%) 4.8% 7.0% 2.2%

Revenue CAGR (Last 5 FY) 7.6% 7.6% 0 25.7% 10.6% (15.1%) 4.8% 6.0% 1.2%

Gross Margin % 31.6% 31.4% (0.2%) 27.5% 44.0% 16.5% 24.7% 27.3% 2.6%

Return on Equity (ROE) 50.6% 32.8% (17.8%) 39.5% 37.2% (2.3%) 12% 10.7% (1.3%)
Cash 4,363 6,130 40.5% 2,650 4,723 78.2% 2,400 2,758 14.9%
Dividend per share 8.7% 9.6% 0.9% 21.9% 10.0% (11.9%) 9.1% 11.8% 2.7%
TEV/ Revenue (as of 30th June, 2020) 2.6x 4.4x 1.1x
TEV/ EBITDA (as of 30th June, 2020) 14.6x 16.6x 7.9x
Last 5 years Cumulative Dividend (USD Mn) 7,680 6,971 1,147
# of Acquisitions (2015 - 2020) 132 4 12

14 1- Market data taken as of December of the respective fiscal years

Source: CapitalIQ
 Key Tangible & Intangible Aspects Make Accenture The Ideal Buyer

COMMERCIAL ASPECTS INTANGIBLE ASPECTS

• The Accenture M&A team can

• Higher Valuation
BETTER DEAL work very quickly – often getting
• Front loaded deal structure SPEED
TERMS deals done in 2 months from LOI
• Cash payout
to closing

• For founders who are looking to • Accenture only submit offers after
HIGHER stay with the business post- getting multiple approvals – ACCENTURE IS
SALARIES FOR transaction, Accenture offers CERTAINTY giving sellers comfort that the VALUED BY MARKET
PRINCIPALS market-leading salaries – path to closure has higher
allowing future upside visibility AS AN ASPIRATIONAL
BUYER
• Accenture has CXO-level • Known to be a professional
relationships at many of the top organization
SIGNIFICANT
companies worldwide BRAND NAME • Being a global company with local
SYNERGIES
• With a seat at every table, cross- teams, the cultural fit already
selling allows for potential upside exists for new employees

Accenture’s strong M&A track record and history of successfully integrating acquisitions into the larger platform are over-arching key
differentiators

15
03.
M&A Analysis
 Deal Volume & Value Over The Last 5 Years Have Increased Significantly Compared To The Previous 5 Years

# OF ACQUISITIONS AVERAGE ACQUISITION SIZE (MN$) INVESTMENT IN ACQUISITION (MN$)

1,700
123
29 29

1,200
22
19 77
930
17 850
16
59 740
52 55
658
10 39 41 521
35 35
7
6 306
5
4 174
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2011

2012

2013

2014

2015

2016

2017

2018

2019

2011

2012

2013

2014

2015

2016

2017

2018

2019
2020 YTD

17 Source: Merger Market, Accenture Annual Reports

 Capability Acquisition Is The Driving Force
# OF DEALS 7 4 5 10 6 22 17 29 19 29 16
Analysis by Rationale
17% 14% 16% 13%
20% 20% 17%
25% 24% 28%
14%
21% 31%
20% 28%
18% 25% 17%
29%

164 100%

20% Deals 61% 25%

80% 83%
73%
60% 63%
55% 55% 56%
47%
1%
25%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Capability Acquisition Captive Acquisition Geography Vertical Specific

18 Source: Merger Market

 Digital Technologies Is Accenture’s New Big Thing
# OF DEALS 7 4 5 10 6 22 17 29 19 29 16
Analysis by Segment 5%
14% 17% 14% 13%
20% 9% 18% 21%
28%
5%
6% 19%
50% 11%
28%
11% 16% 20% 27%
33% 24% 14% 6%
7%
6%
57%
9% 164 15% 14% 32%
100% 20% 9%
Deals 10% 17%
21% 18%
11%
15% 10% 18% 5% 6%
33% 23%
16% 20% 12%
12% 5% 7%
10%
15% 10% 3%
13%
17% 21% 14%
18% 10%
20% 20% 17%
14% 3% 13%
5% 6% 3% 5% 7%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Analytics Cloud SI Consulting Cyber Security Digital Agency Marketing Services Others Product Engineering

Key Deals: Bow and Arrow Limited (A digital Agency playing a key role in bolstering Accenture’s Communications, Media and Technologies sector), Marianne Kaplan AB and IMJ Corporation

19 Source: Merger Market

 USA Remains Accenture’s Safety Net With Europe Becoming Its Target Market
# OF DEALS 7 4 5 10 6 22 17 29 19 29 16
Analysis by Geography 7%
16% 13%
20% 18% 17%
24%
30%
43% 28%
50%

17% 42%
41% 50%
40% 20% 83% 52%
42% 47%
164 14%

Deals
41% 66%
50% 50%
43% 40% 41% 42% 38%
29% 31%
17%

Key geographies within -

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1. North America:
USA - 93%
2. Europe: North America Europe Growth Markets
UK - 28%, Germany - 18%, France - 13%
3. Growth Markets:
Australia - 44%, Brazil - 22%, China - 11%

Key Deals: PrimeQ, Australia’s top Oracle Software as a Service (SaaS) Cloud implementation service providers was acquired for a deal value of $22Mn.

20 Source: Merger Market

04.
Predicting Segments
Through M&A Activity
 Accenture’s First Moves To Acquire In New Sub-Sectors Are Often Followed Closely By Competitors

Cyber Security

Cloud Infra

Cloud SI

Design
Agency

Digital
Marketing

Procurement

2010 2012 2013 2015 2016 2017 2018 2019 2020

22 Source: CapitalIQ
 Key Trends Highlighted By Accenture’s Shifting M&A Activity

DECLINING SUSTAINING ACCELERATING

SEGMENTS SEGMENTS SEGMENTS

On-prem ERP Cloud SI Cloud Infra

BPM Product Engineering Cyber Security

Marketing Services Digital Manufacturing

Analytics Digital Marketing

Design Agency

GEOGRAPHY GEOGRAPHY

Western
UK USA Australia1
Europe

23 1. Multiple global majors are keen on investing in Australia, and limited impact of Covid-19 on Australian economy validates that it is poised for expansion
 To Reach Out To The Authors Of The Report, Please Contact Either Of The Following

Puneet Shivam Abhinav Goel Wei Shen Ng Vedanti Mehta

Executive Director, Director Associate Summer Intern
Co-Head Enterprise Technology
& Services Vertical

EMAIL: EMAIL: EMAIL: EMAIL:

puneet.shivam@avendus.com abhinav.goel@avendus.com wei.ng@avendus.com vedanti.mehta@avendus.com

MOB: MOB: MOB: MOB:

+1 917 554 7030 +1 929 239 7136 +1 917 588 9002 +1 732 997 5501

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