Equiteq has just launched our annual report into global M&A activity in the consulting sector – this is the only publicly available information on the global consulting M&A market.
This year’s report has found that while there was a minor dip in deals in 2013, deal volumes recovered in 2014, with a 13% uplift to the highest deal volume seen since 2007. Around 80% of all the 2,274 M&A deals in the consultancy sector were carried out in developed, western markets in 2014, with around half occurring in North America and a third in Europe (mainly in the UK).
There has been an upward trend in EBITDA and revenue transaction multiples and 70% of the M&A volume is from deals of less than $40m.
Shant Yeremian, Equiteq’s Global Buyer Relationship Director, believes that we are in a very positive seller’s market, good news for consulting firm owners who are aiming to sell.
Mr. Yeremian comments: “However, uncertainties are increasing in some markets that may impact the overall picture. We expect the US and UK to continue an overall upward trend in deal volumes and values, while uncertainty in continental Europe, Asia and Africa/Middle East will make these markets less predictable.”
Looking at the most prolific buyers of consulting firms in 2014, the top of the list was dominated by the communications and marketing agencies. WPP, one of the world’s largest communications services groups, acquired 52 companies in 2014, of which 23 were consulting businesses. The agency was also a leading buyer in 2013 with 22 acquisitions in the consulting sector during that year.
Private equity (PE) is increasingly attracted to the consulting sector for investments and 2014 was a record year for PE acquisitions. Looking at the long-term view of private equity or investment buyers in the consulting sector, we see an increasing proportion of buyers coming from this buyer category. This is in line with the overall sentiment in the PE buyer community, which is becoming increasingly competitive and thus looking more favourably on the consulting sector to find their returns.
This market trend report is aimed at shareholders, prospective shareholders, investors and corporate development executives in the consulting industry. It also provides valuable insight for those involved in running a consulting business or those looking to sell or acquire a consultancy.
In future blogs we shall be drilling down into other key areas of the report, such as geographical hotspots, a review of the market broken down by consultancy area and commentary on the overall market.
To download a full copy of the report please click here. You need to be a member of Equiteq Edge to do this but membership is free and takes only moments.