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June 4, 2012
 
Transaction Analysis

Perficient Inc. (NASDAQ:PRFT) acquires Nascent Systems LP

 

Financial Overview:

  • Transaction Value: $18.1M
  • Enterprise Value: $18.1M
  • EV/Revenue: 1.1X
  • Transaction Structure: Cash and Stock

 martinwolf Analysis:

  • Perficient, Inc (NASDAQ: PRFT), an IT consulting firm, announced Friday that it had acquired Nascent Systems LP, a privately held business technology firm specializing in Oracle ERP. The transaction, which closed on June 1, is the latest in a series of acquisitions by Perficient. It was completed for approximately $18.1M, $11.3M of which was cash and $6.8M of which was Perficient common stock.
  • Perficient's motivation for acquisition is the difficulty of organic growth in the unleveraged IT services industry. Opening new geographic offices is both time consuming and expensive - however, through acquisition, Perficient increases its ability to rapidly enter new markets. Doing so provides new customers and potentially new offerings while inhibiting competitors' growth in those markets. 
  • The acquisition will boost Perficient's revenue to approximately $340 M, add more than 70 employees and expand its enterprise client base especially in the Texas, Oklahoma, Lousiana and Arkansas region.
  • Furthermore, Perficient is incorporating all Nascent partners into leadership roles, with Nascent Co-Founder and Chief Executive Chris Wilson joining as a General Manager. 
  • The structure of the deal, which is similar to those that Perficient has undertaken in the past, allows owners to create more value by effectively trading in their stock for stock in a larger company, while also allowing them to hedge their bets with a large cash payment. 
  • This is the sixth acquisition by Perficient in a period spanning just over two years as it pursues a growth strategy that includes buying competitors that open new markets or add new technical proficiencies.
  • Recent acquisitions include:
    • Feb. 2012 - PointBridge Solutions, LLC, a technology consulting firm specializing in Microsoft solutions (click here to read our Spotlight on that transaction).
    • July 2011 - JCB Partners (JCB) LLC, a technology firm that leveraged the IBM Cognos software suite.
    • April 2011 - Exervio Management Consulting, Inc., a business and management consulting firm.
    • Dec. 2010 - speakTECH, Inc, an interactive design firm and Microsoft National Systems Integrator partner.
    • March 2010 - Kerdock Consulting, a management consulting firm.
  • Smaller IT services players, such as Nascent, are worth more to a larger entity than as a standalone enterprise. The synergies that a large organization can bring will add more value by increasing the top line revenue, particularly in environments where scale matters which are experiencing pressure on gross margins that is slowing growth.
  • martinwolf believes that owners who are staying should see this potential manifest in increased earnouts.  

Please go here to read the press release.

 

martinwolf was not the adviser in this transaction.  

  

To learn more about this transaction or our firm,  

contact Matthew Putzulu at mputzulu@martinwolf.com

About martinwolf    

 

With offices in San Francisco and Bangalore, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

   

December 1, 2011

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Please click here to view the announcement.   

 

September 30, 2011

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Please click here to view the announcement. 

      

September 20, 2011  

Accel-KKR, a technology-focused private equity investment firm, announced that it had taken a majority stake in Infinisource. Infinisource is a leading benefits administration technology and services company. martinwolf | M&A Advisors represented the seller in this transaction.  

Please click here to read more.    

         

martinwolf | M&A Advisors 2012    

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