This document discusses valuation multiples for mergers and acquisitions (M&A) in the backoffice finance and accounting industry. It provides details on typical valuation multiples paid for different types of deals, from staffing firms to outsourcing solutions providers. It also lists recent example deals and acquisition targets in areas like accounting, consulting, and financial software platforms. The document aims to provide industry participants with benchmarks and insights into current M&A activity and valuation trends in the backoffice F&A space.

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Backoffice F&A Deal Valuation Multiples.
Industry Keywords: Accounting, Backoffice, Bookkeeping, BPO, F&A, FaaS, FAO, Outsourcing,
Outsourced CFO/Controller, QuickBooks, Xero, Intacct, Netsuite, Workday
M&A Subscale Deal Multiples Revenue Valuation
0 0.5 1.0 1.5 2.0 2.5
Staffing Accounting & Consulting Recurring Solutions Outsourcing BPaaS
Industry Valuation Notables
 Most accounting deals are priced 80 to 100% of annual revenues (source: AccountingToday.com)
with a premium paid for outsourcing & managed solution providers with long‐term contracts.
These accounting firm deals typically pay 0% to 20% upfront based on either 1 to 1.3x gross
revenues or 1.5 to 3X SDEs, or 2 to 4X EBITDA.
 Professional consulting services have hitorically traded at <1X revenue multiple while scaled
outsourcing solutions have traded at >2X, with additional premium paid for industry centric,
scaled asset (>$25M) with recurring managed solutions. More than 251 professional services
M&A deals between 2017 to 2019 with the majority of subscaled average deal size between
$7m to $14m at 0.5X revenue multiple with 6.8 EBITDA multiple with 65% of deal paid
upfront with remainder over 3 years earnourt.
 2018 – Multiple deals <$20m to acquire books by platform across Intacct, Workday, Netsuite,
SAGE, Microsoft, FinancialForce, Acumatica.
 2018 – The Rise of the “As‐A‐Service” Economy (“AaS”) as illustrated by more than a $1B in
funding over the past 2 years.

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Deal valuation drivers
1. Quality of Earnings
2. Financial Measures such as the Quality & Tenure of the Customer Contracts KPIs: ACV,
MRR, Months Under Contract, GP %, etc..
3. Customer Unit Economics: revenue and profit per customer
4. Valuation Comparables
5. Market/Industry Strategy & Forecast
Deal considerations
1. Transaction Structure
2. Valuation Methodology
3. Tax impact/consequences
4. Contract transfer consents
5. Earnouts, Payments, Working Capital Adjustments, Escrows
6. Closing Conditions
7. Agreements: Employments, Corporate etc.
M&A Drivers
1. Aged founders without succession plans with a competitive talent market
2. Cost to maintain regulatory and technology ‐ either need to triple down or will not be
able to scale do to rising minimum professional costs
3. Migration from compliance and tax to building managed solutions ‐ geographic and
portfolio expansion , ~20% of acqusitions are non CPA firm deals
Most common acqusitions
1. Consolidation of consulting & accounting firms
2. F&A consulting/outsourcing/staffing merger
3. Outsourced finance and accounting merger
4. Workday, Netsuite, Intacct partners/resellers acquired by consulting firm

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Buyer Map
Technology Platforms & Ecosystem
Platforms with Partners
Consulting Accounting Outsourcing Managed Solution Partner
Holding Company Buyers
B2BCFO
CBIZ (NYSE: CBIZ)
KPMG Spark
Randstad
RGP
Right Networks
Savantis (SAP, Enterprise)
The DLC Group
Trintech
Accounting
AICPA Top 200
Armanio
Aprio
BKD
BDO
CLA
LBMC
MossAdams
RKL
RSM
Sikich
Wipfli
Sponsored FaaS provider
Gusto [$316m, multiple]
OneSource Virtual [TCV] ~$150m
Consero Global [PEG] ~$50M
Bench [$49m, multiple]
ScaleFactor [$43m, multiple]
Expensify [$38m, multiple]
Botkeeper [$25m, multiple]
Ceterus [$20m, multiple]
Pilot [$15m, Index Ventures]
Signature Analytics [$9m, Tide Rock Holdings]
Indinero [$9m, multiple]
BKE [$9m, multiple]
Serent Capital FranConnect and Compeat
Subscale Deal Multiple Comparables
Illustrative subscale deals reflect <0.5X to 4.3X revenue multiple
2019 ‐ CBIZ (NYSE: CBIZ) acquires The Wenner Group (outsourced F&A CPA with 14 EE and $2.4m revenues).
2018 ‐ Alight acquired Carlson Management Consulting (Sage Intacct & AdaptiveInsights partner) with $5.6m in annual revenues and 34 FTE).
2018 – InfoSys Management acquired by SWK Technologies. Reseller of SAGE and Acumatica solutions acquired for $1.7M.
2018 – AcctTwo acquires Leap The Pond ($3.7m, 16 EE).
2017 – Accretive Solutions acquired by RGP – Resources Global Professionals, FAO acquired for $19.4m (500 EE, <1X rev, 4X EBITDA).
2017 – B&G Finance & Accounting acquires SmartResources for $8m at 0.6x EV/Rev multiple.

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Backoffice Finance & Administration Industry Snapshot
Small Business to Enterprise Platforms Midmarket Leaders Enterprise
Associations
Accounting
Consulting
Staffing
Outsourcing
Global
Market Growth Factors.
 Demand for digital transformation including shift to the cloud, demand for F&A optimization, spend efficiencies, and analytics
 Demand for “Finance‐as‐a‐Service” (FaaS) as well as BPaaS and Accounting‐as‐a‐Service
 Shortage of sourcing procurement advisory services
 Midmarket demand for managed FAO support services
 Buyers want advanced analytics and automation beyond reporting and core accounting support services
 Demand for F&A optimization: clarity, analytics, spend efficiencies
 Shortage of certified technical specialists
 Increased industry complexities, compliance, and regulations
 Buyers spend $4X on services for every dollar on tech to maximize their operations
 10% spend management fee available for trusted partners who advise and manage the stack and vendors
Industry Commentary.
While the global enterprise market is highly competitive, the midmarket, defined as
deals below $1m ACV, is bifurcated into Implementation Consultants and Outsourcing
(FAOs, BPOs, MSPs) providers. *Overlap exists for these 2 groups.
1. By Platform & Industry there are more than ~550 Consulting & Implementation services
firms in North America with greater than >$1m that provide outsourced backoffice services.
2. By Outsourcing firm, more than 200 FAO‐BPO outsourcing solution providers with
midmarket technical competencies.
The lower middle‐market is ready for consolidation by solution providers that want to grow their
footprint and technical competencies.

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M&A Corporate Development Consolidation Landscape.
Opportunity to consolidate fragmented providers without the full range of
portfolio, platform, and strategic capabilities to not only grow market share, but
increase the portfolio of capabilities including:
Resellers by Platform Services & Vendors
 Workday ~53
 Sage ~200
 MSFT ~400
 NetSuite ~100
 Epicor ~45
 Thomson – 150
 SFDC Force.com ~99
 QBO ~Hundreds
 XERO ~40
 Freshbooks ~20
 Zoho ~50
 ServiceNow ~20
 Acumatica ~10
 Wave ~20
 By Industry
 By Specialization
Backoffice Services Industry M&A Corporate Development Commentary.
Deals driven by the following industry drivers:
 Continual movement of larger accounting firms acquiring non‐CPA firms
 Acquisition by outsourcing firms to acquire payroll/HR/workforce services (WFM)
 Industry consolidation of resellers. Scalability by consolidating service firms trapped
into either Implementation consulting or small business models.
 Firms needing an external solution for succession are now going to market much
sooner, rather than procrastinating to a point where they are faced with accepting
any offer that comes along or winding down
 Need for a portfolio of services, tools, and apps to increase profits per customer.
 Portfolio change as firms shift from traditional accounting to technology and
nontraditional services across digital security, HR consulting and payroll, all of which
have huge cross‐selling potential to both existing and future clients.
 Majority of service deals priced 80% to 100% of annual revenues, with outsourcing
deals commanding a premium at 2x revenue multiple for managed solutions.
FAO Industry Milestones.
2018 – QuickBooks Enterprise launches to compete with middle‐market solutions
2018 – Proliferation of new Ecosystems, Marketplaces, & Communities
2018 – FaaS funding: Gusto $314m, $200m+ for TaskUs, OSV $150m, Consero Global $50m, Bench $49m, ScaleFactor $43m, Ceterus $20m, Pilot
$15m, Signature Analytics $9m, BKE $9m
2018 – SAP acquires Qualtrics for $8B
2018 – Workday acquires AdaptiveInsights for $1.6B
2017 – The rise of the “As‐A‐Service” economy drives cloud and FAO deals
2017 – SAGE acquires Intacct for $850M
2015 – Proliferation of hundreds of venture funded FinTech industry solutions
2012 – Workday IPO (FAO and HRO management platform)
2011 – The Cloud SaaS revolution creates the need to solve the gap between small business (QuickBooks) and industry (ERP, PSA, FSM) solutions
2010 – Scaled FAOs focused on enterprises and global corporations while small business dominated by CPAs, bookkeepers, and accountants
2009 – SAGE Intacct and Bill.com approved and certified by AICPA
2009 – FinancailForce.com founded on the SalesForce.com Force.com platform
1999 – Intacct founded

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Backoffice FAO Deals with Price Valuation Multiple1
2019 ‐ CBIZ (NYSE: CBIZ) acquires The Wenner Group (outsourced F&A CPA with 14 EE and $2.4m revenues).
2018 ‐ Alight acquired Carlson Management Consulting, Sage Intacct & AdaptiveInsights partner with $5.6m in annual revenues and 34 FTE.
2018 – InfoSys Management acquired by SWK Technologies. Reseller of SAGE and Acumatica solutions acquired for $1.7M.
2018 – AcctTwo acquires Leap The Pond ($3.7m, 16 EE).
2018 – Schenck CPAs ($88m, revenues, 400 EE in WI) acquired by CLA.
2018 – TrinTech “the last mile of Finance solutions” [Vista Equity Partners] acquired by Summit Partners (growth equity recap).
2018 ‐ Corporate Finance Group, Inc. (CFGI) acquired by the Carlye Group (secondary buyout).
2018 – Winshuttle acquired by STG – Symphony Technology Group (secondary buyout).
2018 – SWC Technology Partners acquired by BDO USA LLP.
2018 ‐ TaskUs acquired by The Blackstone Group (secondary buyout)
2018 – Accenture acquires DAZSI, DAZ Systems Inc ERP service provider.
2018 – Moss Adams acquires Transacction Partners, a firm specailzied in outsourced finance and accounting services.
2018 –Brazilian Quirius acquired by Brazilian Beomex for R$28m.
2018 – Basware acquired by Verdane Capital Advisors. FAO acquired by PEG for $35M eruos.
2018 – TriBridge acquired by DXC Technology (NYSE: DXC) for $152m.
2018 – Info Sys Management acquired by SWK Technologies. Reseller of SAGE and Acumatica solutions acquired for $1.7M.
2018 – AdaptiveInsights acquired by Workday for $1.55B.
2018 – BDO USA LLP accounting & consulting firm acquires Casterline Associates.
2018 – BerganKDV acquires HSMC Orizon, NE CPA and Technology consulting firm.
2018 – RSM US acquires Explore Consulting, Netsuite Consulting partner.
2018 – Aprio LLP acquires HPC Accounting & TAX, tech driven cloud consulting firm.
2018 – Wipfli LLP acquires NE accounting firm Macpage.
2018 – AcctTwo acquires Leap The Pond.
2017 – Accretive Solutions acquired by RGP – Resources Global Professionals, FAO acquired for $19.4m (500 EE, <1X Rev, 4X EBITDA).
2017 – SNI Companies, F&A staffing, acquired by Gee Group for $86m at 0.8X revenue multiple.
2016 – Alsbridge acquired by ISG for $74m in cash and stock.
2014 ‐ Monchilla acquired by Xero for $4.1m plus stock (>4x Rev/EV).
Backoffice Services Industry Commentary.
 Continual movement of larger accounting firms acquiring non‐CPA firms.
 Deals driven by digital transformation, industry consolidation, & shift to the cloud.
 Growth in FAO market driven by demand for cloud solutions, F&A optimization, spend efficiencies, and analytics.
 Majority of service deals priced 80% to 100% of annual revenues, with outsourcing deals commanding a premium.
1
2017 – Tsheets [Summit Partners] acquired by Intuit for $340m.

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FaaS Industry Star Performers
FaaS versus traditional models
Model Type Services Outsourcing FaaS
Business
Model
Nonrecurring project‐
based services
Outsourced functional
services based on cost
savings via “Lift and
Shift” staffing model
Managed solutions
delivered via the cloud for
transaction processing
and recurring services
Contract
Length
Project based 1 to 3 years 3+ years
Rev/FTE $200k <$100k >$200k
Recurring
Revenues
<10% 20% to 60% >60%
Gross Profit
Margin
25% to 45% 35% to 55% >55%
Valuation
(Revenue)
<1X 2X >2X
Source: Based on private company award winning top performers.
The FaaS Industry Solution Model versus traditional Services
 Gross profitability ranges from <40% to >65% by model
 Industry preconfigured solutions command a premium
FaaS Star Performers ~detailed list available upon request
Sector Company Platform Rev/FTE
Consulting Sikich Multiple $195
Consulting 9Gauge Netsuite $175
Consulting Arthur Lawrence Netsuite $161
F&A StaffSource Agnostic $244
F&A DLC Agnostic $194
F&A CFO Alliance Agnostic $157
FAO LTP ‐ Leap the Pond Intacct $231
FAO OneSource Virtual Workday $163
FAO PCG QBO $122

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FaaS Industry Briefing
Keywords: Finance‐as‐a‐Service, Outsourced Bookkeeping, Outsourced Finance,
Financial & Administration Outsourcing FAO, F&A Staffing, Backoffice Administration.
Industry Trends
→ Industry change from relying on a local bookkeeping service to transformation to a solution model that includes a
cloud/SaaS platform plus services.
→ While the global enterprise market focuses on deals greater than $1M ACV, there are small to midmarket opportunities
demanding a modern platform.
→ Leaders are bundling services with cloud “As‐A‐Service” solutions.
→ Move to the cloud creates portfolio opportunities to bundle and also deliver tools, analytics, and backoffice technical
solutions from Administration to Compliance to WFM/HR.
→ Consolidation among resellers.
→ Acquisition of emerging leaders by Accounting, Consulting, Staffing, and Outsourcing.
Industry Snapshot
FOCUS PROVIDER COUNT DESCRIPTION
FAO Startup to Small Business Top 550
Demand for modern expertise:
Projects plus small monthly retainer pricing
FAO Midmarket Top 200
Driven by demand for digital transformation and move to the cloud:
FaaS pricing model similar to BPaaS + FAO pricing
FAO Industry Leaders Top 40 By Industry
Industry solution includes deeper scope of services and industry
software:
Premium pricing for industry preconfigured solutions
F&A Staffing Service Leaders ~140
Demand for certified professionals as well as analytics & procurement:
various pricing models
F&A Partners, Vendors and
Service Providers
Hundreds by type
Types include: SI Consulting, VAR, & Sourcing procurement advisors:
Pricing based on implementation consulting plus managed solution fees
Why Conduct an Industry Briefing Checklist
 Review Finance‐as‐a‐Service trends, and M&A deal opportunities
 Review opportunities
o Geographic market expansion
o Industry consolidation
o Recurring managed service solutions
o Technical services, implementation and consulting capabilities
 Identify 10X opportunities and ideas to outsmart your competition.
Industry
Briefing
→ For a complete list of opportunities, contact
ERGO to schedule your industry briefing.