ICF is acquiring ServiceNow and Appian partner Incentive Technology Group (ITG). ICF gains IT consulting and cloud services expertise, and U.S. federal government clientele.
This is M&A Deal Number 45 that ChannelE2E has covered in 2020. See the complete M&A deal list here.
Valuation:
- ICF will pay $255 million for ITG -- or roughly 2.5 times the seller's annual revenue.
- ITG's annual revenue for 2019 was $90 million, ICG says.
- ITG's EBITDA margin is in the mid-teens, ICF says.
- That means ITG's 2019 EBITDA was roughly $13.5 million (math: $90M X 0.15 margin)
- The deal's value is therefore roughly a lofty 18.9X 2019 EBITDA (math: $255M / $13.5M)
Note: An earlier version of this story contained the wrong math and a far lower valuation multiple. Special thanks to Ravi B (reader comment below) for pointing out my error.
ICF Acquires ITG: Background and Executive Perspectives
ITG was ServiceNow's 2019 U.S. Federal Partner of the Year and has the largest Appian federal practice in North America, ICF asserts. Founded in 2010, ITG has grown to roughly 350 people. Key clientele includes the Department of Health and Human Services, the Department of State, the Department of Homeland Security, the General Services Administration and others.
In a prepared statement about the deal, ICF CEO John Wasson said:
"In addition to delivering on ITG's substantial backlog and business development pipeline, we see significant revenue synergies by combining ICF's domain expertise, robust business development platform and contract vehicles with ITG's best-in-class qualifications, performance track record, deep technology partnerships and leading platform expertise."
Added JC JC Chidiac, ITG's chief operating officer:
"As one team, ICF and ITG bring highly complementary capabilities and will be uniquely positioned to architect and implement technology platforms that drive the strategic transformation agencies need to meet their new mandates. Importantly, this is an excellent cultural fit for our collaborative, entrepreneurial organization, which was a key determinant in our decision to join together with ICF."
Including the M&A deal, ICF now expects 2020 revenue to increase by approximately 10 percent from 2019 levels of approximately $1.48 billion. ICF revenue $1.34 billion in 2018.
ServiceNow Partner Mergers and Acquisitions
ServiceNow has positioned itself as a standard bearer for enterprise IT service management (ITSM) software.
Amid a shortage of ServiceNow technicians and growing demand from customers, dozens of ServiceNow partners have pursued M&A activities over the past couple of years.
ChannelE2E offers a list of ServiceNow partner mergers and acquisitions here.
