Professional Services | Consulting INDUSTRY UPDATE │ March 2021 Professional Services / Consulting Practice Overview

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Introduction Contents

Our March Professional Services Sector Update explores key data and insights on › WHAT WE’RE READING the consulting sector. Access articles on segment trends, the M&A environment post-COVID-19, and reasons why the space provides a compelling investment › PUBLIC MARKETS opportunity. You’ll also find commentary and analysis on current capital market trends and M&A dynamics within the global professional services sector. › ECONOMIC TRENDS Please contact our professionals to discuss our perspectives and experience in the › M&A MARKET TRENDS space. Contacts

Our Practice › Derek Lewis Managing Director Harris Williams’ Business Services Group has experience advising companies that [email protected] provide a range of commercial, industrial and professional services. +1 (804) 915-1118 This particular report focuses on trends and metrics in the following areas: › Bob Baltimore Managing Director [email protected] Business Process Outsourcing Human Capital Management +1 (804) 915-1129 Consulting Information Technology Services › Brian Lucas Education & Training Insurance & Risk Management Managing Director [email protected] Engineering Legal Services +1 (804) 932-1323 Financial Services Marketing & Information › Anthony Basmajian Director Governance, Technology Enabled Services [email protected] Risk & Compliance +1 (804) 887-6030 › Bryce Walker Director Representative Professional Services and Consulting Transactions [email protected] +1 (804) 887-6154

› Graham Gillam Director [email protected] +1 (804) 887-6074

› Taylor Morris Director [email protected] +1 (804) 887-6019

› Pete Morgan Vice President [email protected] +1 (804) 887-6170

2 What We’re Reading

Trends Transforming Management Consulting in 2021

Linchpin 3/5/2021 “The massive management consulting industry continues growing, but not without pains. It has yet to integrate big data or automate processes, making it scalable only so long as qualified individuals continue to move into the industry.” “Adjusting to digitization presents its largest challenge. While many industries from marketing to health care utilize big data and business automation processes, as discussed, this has not reached management consulting yet. This transformation must occur for the industry to continue to grow.” Read the full article here.

COVID-19 is Shaping M&A: Here’s What Private Equity Needs to Know

Plante Moran 2/19/2021 “Like the virus itself, COVID-19’s impact on companies varies depending on the condition and circumstances of their individual b usiness. Some companies were initially hit hard, but rebounded quickly, others continue to suffer lasting effects.” “Professional services such as consulting may have some projects on hold, so staff utilization is down. Nevertheless, most are maintaining staff levels in expectation of return to normal business levels.” Read the full article here.

Key Trends in 2021 for Consulting

InfoDesk 12/1/2020 “Management consulting trends in 2021 will be shaped by the impacts of the Covid-19 pandemic. The subsequent worldwide recession is expected to result in a 14% downturn in the global management consulting industry in 2020, while the U.S. management consulting industry is expected to shrink by 15%.” “Consultancies’ own digital delivery will expand beyond video conferencing and collaboration tools, with offerings designed using emerging technologies like no-code software and AI to create new digital methodologies that transform clients’ fundamental work processes.” Read the full article here.

The Future of Consulting: Shorter, Sharper, Cheaper

Financial Review 10/20/2020 “These factors all combine to mean the future ofconsulting is one where projects, especially those related to information technology, are shorter, sharper and cheaper. It’s a future that will put the high-overhead structure of the big four and Accenture under pressure.” “The pandemic has also demonstrated to business leaders that, when required, employees can quickly adapt to radically different ways of working. This means much less need for the traditional change management program, where a large group of consultants work to ensure client staff accept and are trained in the need for new ways of working.” Read the full article here.

Why Private Equity Firms Are Upping Their Stakes in the Consultancy Sector

Consultancy.org 7/30/2018 “Where previously uncertainty in the market had hindered investor confidence, now the allure of high-quality specialist consultancy assets across the sector, and a recognition and understanding of the impressive returns that many consultancies generate, has acted as a catalyst for growth in M&A activity.” “Despite the project-based nature of many consultancies, private equity (PE) investors have identified that a clear track recordof repeat work with loyal clients can prove attractive as an earnings stream. On top of that, longer-term projects have helped provide better earnings visibility, a fact valued by investors.” Read the full article here.

3 Public Markets1

Historical Stock Prices – Last 5 years

350%

300%

250%

200%

150%

100%

50%

-50% Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21

Historical Median TEV/LTM EBITDA Multiples – Last 5 years

26x

24x

22x

20x

18x

16x

14x

12x

10x

0x Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21

Business Process Outsourcing Marketing and Information Services Consulting Transaction Processing Human Capital Education and Training Insurance, Legal, and Risk Services IT Consulting Managed Services S&P 500 Index

Notes: Data as of March 14, 2021. Comparable company sets listed on page 8. Sub-sector indices weighted by stock price. 4 Public Markets1

12-Month % Change in Stock Price Median TEV / 2021E EBITDA Multiple

Business Process Outsourcing 74.1% Business Process Outsourcing 12.8x Consulting 39.3% Consulting 14.2x Human Capital 71.1% Human Capital 12.6x Insurance, Legal, and Risk Services 26.1% Insurance, Legal, and Risk Services 15.4x Marketing & Information Services 47.7% Marketing & Information Services 18.7x Transaction Processing 18.5% Transaction Processing 20.2x Education & Training 48.9% Education & Training 8.3x IT Consulting 59.1% IT Consulting 12.3x Managed Services 120.6% Managed Services 14.5x S&P 500 15.4% S&P 500 14.6x

Median 3-Year Revenue CAGR (2017 – 2020) Median LTM Revenue Growth

Business Process Outsourcing 9.6% Business Process Outsourcing 2.4% Consulting 7.7% Consulting 1.7% Human Capital 5.0% Human Capital -9.2% Insurance, Legal, and Risk Services 6.6% Insurance, Legal, and Risk Services 2.0% Marketing & Information Services 4.2% Marketing & Information Services -0.2% Transaction Processing 6.0% Transaction Processing 3.0% Education & Training -1.4% Education & Training 3.1% IT Consulting 9.5% IT Consulting 3.5% Managed Services 0.0% Managed Services 13.1% S&P 500 2.6% S&P 500 -1.6%

Median EBITDA Margin (2017 – 2020) Median LTM EBITDA Margin

Business Process Outsourcing 17.3% Business Process Outsourcing 17.0% Consulting 10.8% Consulting 9.6% Human Capital 5.4% Human Capital 5.1% Insurance, Legal, and Risk Services 24.6% Insurance, Legal, and Risk Services 25.4% Marketing & Information Services 22.7% Marketing & Information Services 24.9% Transaction Processing 29.9% Transaction Processing 29.8% Education & Training 7.0% Education & Training 10.3% IT Consulting 17.1% IT Consulting 17.2% Managed Services 12.1% Managed Services 20.3% S&P 500 23.1% S&P 500 24.6%

Net DEBT / LTM EBITDA

Business Process Outsourcing 0.3x Consulting 2.2x Human Capital -0.6x Insurance, Legal, and Risk Services 2.3x Marketing & Information Services 2.1x Transaction Processing 0.9x Education & Training 0.4x IT Consulting -0.1x Managed Services 1.4x S&P 500 1.8x

Notes: Data as of March 14, 2021. Comparable company sets listed on page 8. 5 Economic Trends

U.S. GDP Growth2 Consumer Confidence and Unemployment Rate3,4

(In billions indexed to 2012 USD) 160.0 16.0%

$19.5 5.0% 140.0 14.0% Unemployment Rate Unemployment $19.0 120.0 12.0%

$18.5 100.0 10.0% 0.0% $18.0 80.0 8.0% $17.5 60.0 6.0%

$17.0 ConsumerConfidence (5.0%) 40.0 4.0% $16.5 20.0 2.0% $16.0 0.0 0.0% $15.5 (10.0%) Jan-13 Jan-15 Jan-17 Jan-19 Jan-21 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- 12 13 14 15 16 17 18 19 20 Consumer Confidence Unemployment Rate

Non-Farm Payrolls (1-Month net change)4 U.S. Initial Jobless Claims5

(Payrolls in 000s) Jan-21: Feb-21: 10,000 49(P) 8,000,000 834,000

5,000 7,000,000

0 6,000,000 5,000,000 (5,000) 4,000,000 (10,000)

Initial Claims Initial 3,000,000 (15,000) 2,000,000 (20,000) 1,000,000 (25,000) 0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21

Consumer Price Index4 Services PMI6

Jan-21: Feb-21: 1.7% 55.3 4.0% 70

3.5% 60 3.0% 50 2.5% 40 2.0% 30 1.5%

YOYChange 1.0% 20 0.5% 10

0.0% 0 -0.5% Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

6 M&A Market Trends1

Professional Services M&A Volume by Year

Note: Data through March 14, 2021. Representative Consulting Transactions

Date Target Business Description Acquirer(s)

2/22/21 KSM Consulting Provides data, technology, and digital transformation consulting services Investcorp

Stretto 2/17/21 Acumen Recovery Services Provides IT managed services and ServiceNow implementation (Stone Point Capital)

2/16/21 Infinity Works Provides cloud and digital transformation consulting services Accenture

2/9/21 Momentum Solutions Provides consulting services and managed IT solutions BGSF

2/5/21 BTP Consultants Provides technical control and consultancy services to the construction sector Apax Partners

2/3/21 Thought Logic Consulting Provides business and technology transformation consulting Renovus Capital Partners

2/1/21 Bluvault Solutions Provides management consulting and technology services CrossCountry Consulting

Provides enterprise consulting specializing in data analytics, artificial intelligence, and 1/12/21 Servian Cognizant Technology digital services ReSource Pro 1/12/21 Strategy Meets Action Global provider of operational solutions for insurance organizations (DFW Capital) ReSource Pro 1/12/21 The Nolan Company Provider of retirement plan design and administrative services (DFW Capital)

1/11/21 Linium ServiceNow focused digital business and transformation consultancy Cognizant

Ryan Specialty Group 1/4/21 Burgess Cawley Solutions Provides property tax consulting services (Onex) Prime Technology Group 1/3/21 Synerzip Provides software product development services (Frontenac) Ryan Specialty Group 1/3/21 TCF Services Provides tax incentive and government grants consulting services (Onex)

12/18/20 Zilker Technology Provides digital consulting and systems integration E&Y

Provides consulting services related to human factors engineering / ergonomics, Rimkus Consulting 12/16/20 Applied Safety and Ergonomics product and occupational safety, and product warnings (Century Equity Partners) Disputes and expert advisory specialist firm of construction, technology, accounting 12/7/20 Blackrock Expert Services Group Duff & Phelps and financial services professionals Provides requirements and program management consulting in the life sciences ettain group 12/3/20 Centerline Partners market (A&M Capital)

11/30/20 PA Consulting Provides innovation and transformation consulting services Jacobs

7 Our Firm

Harris Williams has a broad range of industry expertise, which creates powerful opportunities. Our clients benefit from our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website at www.harriswilliams.com/industries.

Aerospace, Defense Building Products Business Consumer Energy, Power & Government Services & Materials Services & Infrastructure

Healthcare Industrials Specialty Technology Transportation & Life Sciences Distribution & Logistics

Harris Williams Office Locations

United States Europe

BOSTON R I C H M O N D FRANKFURT One International Place (HEADQUARTERS) Bockenheimer Landstrasse 33-35 Suite 2620 1001 Haxall Point 60325 Frankfurt Boston, Massachusetts 02110 9th Floor Germany Phone: +1 (617) 482-7501 Richmond, Virginia 23219 Phone: +49 069 3650638 00 Phone: +1 (804) 648-0072 CLEVELAND LONDON 1900 East 9th Street SAN FRANCISCO 25 Savile Row 20th Floor One Market Plaza, Steuart Tower 4th Floor Cleveland, Ohio 44114 11th Floor London W1S 2ER, England Phone: +1 (216) 689-2400 San Francisco, California 94105 Phone: +44 (0) 20 7518 8900 Phone: +1 (415) 288-4260 MINNEAPOLIS 222 South 9th Street WASHINGTON, D.C. Suite 3350 800 17th St. NW Minneapolis, Minnesota 55402 2nd Floor Phone: +1 (612) 359-2700 Washington, D.C. 20006 Phone: +1 202-207-2300

8 Harris Williams

Sources

1. S&P Global Capital IQ 4. U.S. Bureau of Labor Statistics 2. U.S. Bureau of Economic Analysis 5. U.S. Department of Labor 3. The Conference Board 6. Institute for Supply Management Public Comparable Companies: BPO: Cognizant, Computershare, DXC, ExlService, Genpact, Sykes Enterprises, Tata Consultancy, TTEC, Wipro, and WNS Consulting: Accenture, CBIZ, CRA International, FTI Consulting, Huron Consulting Group, ICF International, and Resources Connection Human Capital: 51job, ASGN, Barrett Business Services, Hays, Heidrick & Struggles International, Insperity, Kelly Services, Kforce, Korn F erry, ManpowerGroup, Randstad, Robert Half International, SThree, TrueBlue, Willis Towers Watson IL&R Services: Aon, Arthur J. Gallagher & Co., Brown & Brown, Crawford & Company, Marsh & McLennan Companies, Willis Towers Watson M&I Services: Alliance Data Systems, comScore, CoreLogic, CoStar Group, Equifax, Experian, FactSet, Fair Isaac, Forrester Research, IHS Markit, Informa, LiveRamp Holdings, Moody's, Morningstar, Nielsen Holdings, Omnicom Group, Publicis Groupe, The Interpublic Group of Companies , Thomson Reuters, Verisk Analytics, Viad, Wolters Kluwer, WPP Transaction Processing: Automatic Data Processing, Fidelity National Information Services, Global Payments, Jack Henry & Associates, Paychex, The Western Union Company Education and Training: Adtalem Global Education, American Public Education, Franklin Covey, GP Strategies, Grand Canyon Education, K12, Lincoln Educational Services, Pearson, Scholastic, Strategic Education, Zovio IT Consulting: Accenture, Atos, Capgemini, CGI, Cognizant Technology Solutions, DXC Technology, Genpact, HCL Technologies, Infosys, Tata Consultancy Services, Tech Mahindra, Wipro Managed Services: American Virtual Cloud Technologies, NetApp, TTEC, Zscaler, Rackspace Technology, Datto, Snowflake

Note: Data through March 14, 2021.

Disclosures and Disclaimers

Investment banking services are provided by Harris Williams LLC (“Harris Williams”). Harris Williams is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8th Floor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales, registration number 07078852. Harris Williams& Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: [email protected]). Geschäftsführers/Directors: Jeffery H. Perkins, Paul Poggi, VAT No. DE321666994. Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business. The information and views contained in this content have been prepared in part by Harris Williams. This content does not purport to be comprehensive or to contain all the information that a recipient may need in order to evaluate any investment or potential transaction. This content is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. Any and all information, including estimates, projections and other forward-looking statements, presented in this document may involve various assumptions and significant elements of subject ive judgment and analysis that may or may not be correct. Harris Williams has not independently verified, and neither Harris Williams nor any other person will independently verify, any of the information, estimates, projections or forward-looking statements contained herein or the assumptions on which they are based. The information contained in this document is made as of the date hereof unless stated otherwise. Harris Williams does not expect to update or otherwise revise this document nor provide any additional information, nor correct any inaccuracies herein which may become apparent. This content is intended for institutional use only and should not be relied upon by retail investors or members of the general public. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation or warranty as to the accuracy or completeness of such information, and information contained herein that is based on material prepared by others may involve significant elements of subjective judgment and analysis which may or may not be correct. Opinions, estimates and projections contained herein constitute Harris Williams’ judgment and are subject to change without notice. This content is not to be construed as investment advice an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular transaction, nor shall this content form the basis of any contract. It does not constitute and should not be construed as an endorsement or recommendation of any entities’ products or services. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.