Update on M&A Activity Within the CRM Industry

December 17th, 2012

Despite the continued sluggish growth in the global customer relationship management (CRM) industry (< 5% per year), which consists of inbound and outbound call center activity and online relationship management solutions, M&A activity has increased substantially in 2012 within this market.

In Q3, the CRM industry generated 7 transactions representing $445 million in total deal value.  In 2012 through Q3, the CRM industry has generated 19 transactions representing $620 million in total deal value.

 

 

 

 

 

 

 

 

 

 

 

 

While Sykes Enterprises’ $150 million acquisition of Alpine Access, a Denver-based work-at-home agent provider of CRM and related services, was a significant contributor to Q3’s results, once again the majority of CRM deal activity involved companies located internationally. Xerox acquired WDS (financial terms not disclosed), a UK based provider of contact center and related services. Tech Mahindra acquired Hutchison’s back office unit, Hutchison Global Services, based in India for $87M. UK based Capita Plc acquired Full Circle, a South African call center company, and Moroccan based Intelcia acquired French CRM company The Marketingroup (financial terms not disclosed).

This uptick in CRM M&A in 2012 has been driven predominantly by international deal activity, with 11 of the 19 transactions involving a company located outside of the United States. These 11 transactions have generated a total of $432 million in deal value, or 70% of total deal value for 2012 YTD.

While we expected CRM M&A activity to drop off in Q4 as is typical in this market, Bain Capital pushed that trend aside when it completed its $1.34 billion acquisition of Telefonica SA’s call center business, Atento. Deriving most of its revenue from the Brazilian market, Atento traded at roughly 6.4x its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), an extremely attractive multiple given the company’s size. Atento represents the existing focus of CRM acquisition interest from strategic and financial buyers – platform acquisitions in emerging economic markets with growth potential at attractive valuation multiples.

In 2013, we anticipate continued consolidation of CRM companies in the U.S. market, as well as continued interest from strategic and financial buyers in platform acquisitions in other emerging markets such as China, India and Eastern Europe.

For more information on M&A activity within OBS, download the Q3 2012 Outsourced Business Services Sector Review or download the Customer Relationship Management Outsourcing Industry Report for more information on the CRM industry. For more information on current transaction activity, keep and eye out for the Q4 2012 Outsourced Business Services Sector Review.

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