• Checking the Scoreboard: In this week's MW Scoreboard, our proprietary database of median multiples in the IT industry, we can consult two categories for context on this transaction: 
• First is IT Outsourcing, trading at 1.99x revenue and 12.6x EBITDA. 
• Second is Offshore Outsourcing >500M, trading at 2.62x revenue and 12.6x EBITDA. 
• From these higher numbers, we can conclude that Xerox's outsourcing business provides significantly lower value-added services and gross margins than its peers.
• Low Size Where Size Matters: Another interesting point about this transaction is Atos' relative lack of presence in the US market. This transaction will triple its size in the US, catapulting it to Atos' largest market - but the company must continue to be active in growing its business to compete with its new peers: TCS, Wipro, Cognizant, HCL, IBM and HP.
• Go Big or Go Home: Xerox is divesting this aspect of its business because it can no longer compete with the global outsourcing companies that give the space their full attention and resources. Without a competitive advantage or compelling high margins, this unit was not worth the resources Xerox was putting into it.

 For more information, view the press release by clicking here.

*Note that while financial information was not officially disclosed, reports in Bloomberg and the New York Times provides estimates for revenue and EBITDA, respectively.

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