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martinwolf Transaction Analysis
CDW Acquires Minority Stake in Kelway, With Option to Fully Acquire by 2017
Financial Information*
- Enterprise Value �240 Million ($380 Million USD)
- EV/2014 Revenue 0.46x
- EV/2014 EBITDA 7.27x
Transaction Facts
- IT Solution Provider CDW (Nasdaq:CDW) announced yesterday it had acquired 35 percent of privately-held UK-based solution provider Kelway, with the ability to acquire the remaining 65 percent by mid-2017.
- While this transaction is CDW's first acquisition outside of the United States, the two companies have been strategic partners for the past 18 months.
- Financial information for the transaction was not officially disclosed, but valuations from media reports are in-line with industry valuations for solution providers as tracked by the MW Scoreboard.
Search for Growth Leads to Familiar Partner
- Serving Cross-Border Enterprise Clients: Acquiring UK-based Kelway strengthens CDW's ability to serve cross-border enterprise accounts, positioning the company well for future growth and providing more control, particularly as it builds its services offerings.
- Pushing Beyond Traditional Limits: CDW has not been acquisitive in the past - its last major acquisition was of Berbee Information Networks in Sept. 2006 for $184 million. However, CDW previously had a strategic partnership with Kelway, and slowing growth in CDW's core markets has led the company to consider converting this partnership to an outright acquisition.
 - PE Exits After Strong Growth: It was reported last year that Kelway had outgrown PE backer Core Capital. Beginning with a �5 million investment in Nov. 2006, their partnership has grown to �8.5 million while revenue grew from �45 million to �530 million in a combination of organic growth and seven acquisitions. According to media reports, Core Capital is receiving a significant payout of �76 million ($120M) in exchange for its 29 percent equity stake.
- CDW Sees Opportunity to Remain on Top: CDW has remained at the top of its peer group since it held its IPO in June 2013. By acquiring a longtime partner, and completing the acquisition in stages rather than buying Kelway outright, CDW is opting for a high-potential expansion while reducing integration risk.
For more information, view the press release by clicking here.
martinwolf was not the advisor in this transaction.
*Financial information was not disclosed publicly, but media reports citing persons familiar with the matter provided the figures included above.
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About martinwolf
Walnut Creek, CA Bangalore, India
With offices in the San Francisco Bay Area and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 125 transactions in sixteen countries and sold seven divisions of Fortune 500 companies.
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 mputzulu@martinwolf.com.
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