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May 9, 2014
martinwolf Analysis

Presidio Taps Barclays and Credit Suisse to Explore Potential IPO or Sale, Reports Say

    

Financial Information (Approximate)*
  • Revenue:                                                                               $2.3 Billion
  • EBITDA:                                                                                $180 Million

martinwolf Analysis

 
A report surfaced earlier this week in Reuters alleging that IT consulting company Presidio Inc. has tapped Barclays PLC and Credit Suisse Group AG to pursue a possible sale or IPO, with all involved companies declining to comment.

 

According to the reports, Presidio, which is owned by private equity firm American Securities, is expected to have 2014 revenues of $2.3 billion and EBITDA of $180 million. With these numbers, its EBITDA margin of 7.8% exceeds those in its peer grouping. If accurate, this would imply that Presidio provides a higher value than its competitors. The reports also cited a possible valuation of $1.5 billion, which would suggest an EV/EBITDA multiple of 8.3x. This would be a very high multiple, second only among its peers to CDW, which is valued at 10.2x LTM EBITDA. 

 

The report follows NTT Dimension Data's April acquisition of Nexus IS, a smaller transaction in a similar space. However, because of its size, if Presidio were to be marketed, it would most likely be acquired by a public strategic - potentially in a cross-border transaction - but most likely not another private equity firm.

 

Based on what is being reported, there are very few channel players that could acquire Presidio at this valuation. However, we expect to see strong interest from telecommunications companies looking to provide more value and differentiation in an increasingly commoditized space by branching out into cloud hosting.

 

While an IPO has the potential to create more value, a sale would provide more cash up front to the current shareholders. Whichever takes place, a major such transaction in this space could lift the valuations of both of public and other privately held solution providers with comparable operating metrics, similar to CDW's effect on valuations when they went public last year. 

 

For more information, click here for the Reuters report.

 

*Approximate financial information from Reuters report.

 

martinwolf was not the advisor in this transaction.

About martinwolf    

 

                
             San Francisco, CA                                                Bangalore, India

With offices in San Francisco and Bangalore, India, 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 nine countries. We are a five-year member of the Merrill Lynch PS Referral Network, and are partnered with the Enterprise Advisory Department of CICC (a leading bank in China) and BMR Advisors, a leading professional services organization in India.    

 

The firm is also a presenting sponsor of the Global IT M&A Forum.   

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at [email protected]

 

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