How an international office expansion may risk equity value

International Expansion Blog Photo Cropped

Expanding your consultancy business and opening new offices abroad can seem an attractive proposition, however, it’s advisable to proceed with extreme caution. It’s important to consider the significant equity value and financial instability associated with such a move. If your consultancy is smaller than $10m, a failed international expansion can be catastrophic or make your business unsellable. While there are several sound strategic reasons for expanding overseas, those looking to grow value and realize equity must consider an overseas expansion through this lens.

There are often two assumed benefits made by consultancy owners when thinking about expanding overseas:

  1. The business will grow faster by selling current services into a new market
  2. The consultancy’s M&A position and attractiveness to strategy buyers or investors will improve, or at least not be impaired by such a move

The first point suggests that the business will grow faster and be more profitable, but is this true and is the timing right? The business owners may sense that the business has hit a growth ceiling in the home market, or the business is experiencing sufficient demand in other markets, but when digging deeper this is often not the case.

For instance, has the business really reached a glass ceiling or is it flat lining because there isn’t a disciplined approach to client acquisition? Or is the current sales and marketing process simply inadequate to drive growth?

If you are attracting prospective clients across borders, then consider the distraction; the cash flow commitment of setting up shop to cater to new markets is significant. To lessen these risks, make sure that the business is making enough profit in these markets before committing to a move.

The second assumption – that moving abroad will attract greater M&A demand and a higher equity value – is by no means certain. Buyers in the consulting M&A market acquire for a wide range of strategic reasons. Yet most buyers will focus on acquiring consultancies with deep domain expertise and intellectual property that can be leveraged (see our Buyers Research Report). Tight geographic focus is a key factor, but not necessarily a deal breaker either; top tier buyers, those with the deepest pockets, already have an international footprint and might not see the value in a consultancy that is spreading itself across borders.

This doesn’t mean that SME firms cannot be attractive or valuable if they are international. There may be a buyer out there for whom you are a perfect fit. However, it is generally true that the buying market will be more limited.

So, think very carefully about the risks of opening up an office in a new country for business growth and development purposes. SME consulting firms operating out of multiple countries will appeal to a more limited acquisition market than those with niche capability in a single growth market.

It’s important to consider the implications of international expansion against your M&A market positioning, in conjunction with your value growth plans and target time to sell.

If you’d like to read more about the equity value risks in international office expansion, please read the full article here.

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Consulting Sector M&A Deals for week beginning 19th October

businessman doing handstand on the beachInfosys Consulting, Inc. (USA) acquired Noah Consulting, LLC (USA)
Deal Size: Undisclosed Industry: IT Consulting Date: October 2015
Infosys has acquired US-based Noah Consulting for a reported fee of $70 million. The deal will improve Infosys’ technology and analytics offering to its energy and utilities clients that continue to undergo often forced cost reduction and efficiency exercises as low oil prices cut into revenues and reserves. Noah Consulting was founded in 2008 and has its headquarters in Texas (Houston). The US consulting firm has a further office in Alberta, Canada, and employs 122 staff. The company is primarily focussed on delivering information management solutions, leveraging a number of best-practice data management, information quality, data integration, business intelligence, data warehousing and master data management solutions. Noah Consulting’s clients include a number of upstream oil and gas companies, ranging from oil field service companies, to independents, to super major players. Infosys, through the acquisition, will gain access to Noah Consulting’s information strategy planning, data governance and architecture capabilities, which will be synergised with its own technology and outsourcing services. The deal for Infosys is inspired by the need for oil companies to improve their operational efficiency as oil prices continue to be low. Noah’s analytic approach offers a further solution for Infosys’ energy and utilities clients, clients that provided the firm 4.7% of its revenues last year. “The upstream oil and gas industry is facing unprecedented challenges that demand faster and better ways of achieving return on investment. This requires a well-defined and executed information and data management strategy that will allow companies to increase efficiencies across the lifecycle – from exploration to production,” explains Rajesh Murthy, EVP and Global Head of Energy, Communications and Services of Infosys. “With this acquisition, we are uniquely positioned to offer end-to-end data management services to oil and gas companies globally.” (

Deloitte & Touche LLP (Canada) to acquire Asset Performance Group (Canada)
Deal Size: Undisclosed Industry: Engineering Consulting Date: October 2015
Deloitte announced today that it has entered into a definitive agreement to acquire the Asset Performance Group (APG), a leading asset reliability consultancy based in Burlington, Ont., and Calgary, Alta. This transaction brings new reliability engineering and maintenance capabilities to Deloitte’s Consulting practice, enabling the firm to deliver a full suite of asset reliability engineering, asset management and performance improvement services to capital-intensive industries across Canada, the U.S. and South America. “Acquisitions such as this demonstrate Deloitte’s commitment to providing integrated services that help our clients respond to the most significant challenges and opportunities facing their business”, said Jurgen Beier, Consulting, Energy & Resources Leader at Deloitte Canada. “By adding leading asset reliability engineering and performance management services to our Operations Excellence practice, Deloitte will be better equipped to meet the operational needs of our energy and resources clients.” “The team from APG will continue to build on the foundation we’ve established as a market leader in asset reliability,” said Sherry Revesz, Principal and Founder, Asset Performance Group. “By combining our expertise with Deloitte’s suite of Operational Excellence services, we will be able to offer clients a more comprehensive, end-to-end set of services.” ( reading

Growing equity value webinar series: Quality of fee income

In the last few weeks we’ve been running a series of free 30-minute webinars to help attendees grow the equity value in their consultancy firms. Attendees at each webinar are able to submit questions, and we’re going to be sharing and answering these questions in a series of blog posts. This week we’re looking at the questions asked during the webinar on how you can make client fee income more predictable and reduce forecast revenue risk.

  1. How will a buyer view a business with only three months of forward load (i.e. future pipeline)?

Potential buyers are likely to view consultancies with only three months of forward load as having too much risk. They’re looking for a good return from consultancies they invest in and if the sales engine and proposition of your business has only built a pipeline of three months of work they’re likely to look elsewhere.

However, buyers do understand that consultancies have a short forward load relative to many other types of organizations, and would not be put off by a forecast that goes 9-12 months into the future. This is where building a programme of work with a client can help rather than the ‘one and done’ engagement.

You can read more about how to build your consultancy’s sales engine here.

  1. What is the right balance of sub-contractors to employees?

While there isn’t a precise numerical answer to this question, it is important that, regardless of the ratio of sub-contractors your consultancy employs, the core competency of the business remains with employees, rather than contractors. Furthermore, as a general rule, employees rather than contractors should manage the key client relationships.

Businesses often make a lower margin when employing contractors. If your average margin across the board is dropping below 50% because it’s being diluted by contractors, this is a sign that you need to rebalance your use of employees to contractors.

For more information on this topic, read our blog on getting your staff balance right.

  1. Any tips on improving utilization among consultants?

From experience, we have come across consultancies where the most senior executives, including founders, are engaged in service delivery. It’s little wonder junior staff are underutilized if the seniors fail to delegate delivery work.

Consider this military imperative: delegate as much as possible to the lowest rank possible. This insight applies to consultancies too. To give senior members the confidence to delegate, it is important that consultants and other staff members are adequately trained. It is worth investing in training staff throughout all levels and across all skill sets. To guarantee that the training is relevant to the skills needed, consultancies should codify their intellectual property (IP) to ensure that it is learned and replicable for future success.

Finally, as with all of our webinars in this series, our key takeout is presented in our Start, Stop and Continue strategies. To immediately improve the quality of fees in your consultancy:

Start:             Start getting better monthly visibility of your future pipeline and matching it with capacity

Stop:             Stop trying to sell everything to everyone

Continue:     Continue to work within your existing sectors in order to grow new clients and avoid having all your eggs in too few baskets

To sign up to listen to a recording of this webinar, please click here. To see our upcoming webinars in the series, please click here.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners grow and realize equity value in their business. Register here to gain full access.

Consulting Sector M&A Deals for week beginning 12th October

businessman doing handstand on the beachWarren Whitney (USA) merges with Convergent Business Solutions (USA)
Deal Size: Undisclosed Industry: IT Consulting Date: October 2015
Warren Whitney, a management consulting firm that serves privately held and nonprofit organizations, has added technology consulting expertise through a merger with Convergent Business Solutions. Warren Whitney, a 15-person business based in western Henrico County, announced the merger Monday. Katherine Whitney, co-founder and director of Warren Whitney, will head the merged company. David Nelms, owner and sole employee of Convergent Business Solutions, will lead the technology practice. The merged company will operate from the Warren Whitney offices. Warren Whitney, in business for more than 26 years, offers senior-level leadership for its clients in finance and accounting, human resources, and sales and marketing. The company also provides strategic planning, board governance and executive searches. In addition to technology consulting, Convergent Business Solutions provides contract chief information officer and chief operating officer services for midsize organizations, focusing on “strategy that integrates technology and operations within the business,” according to a statement from Warren Whitney. Scott Warren, co-founder of Warren Whitney, said in the statement that the two companies have collaborated on work with a number of clients and that Nelms “has built his technology firm in a model that parallels Warren Whitney’s.” “Both firms work with midsize organizations to help them address critical business challenges,” Nelms said. “Our new alignment allows us to address all aspects of an organization’s needs.” Larry Gumprich, chief financial officer for Integrated Global Services, a client of the two firms, said in the statement that the companies “have worked seamlessly as a team for us for the last seven months on an important revamping of our information systems. The merger comes as no surprise.” (

TÜV SÜD AG (Germany) acquired Dunbar and Boardman Partnership Ltd. (UK)
Deal Size: Undisclosed Industry: Engineering Consulting Date: October 2015
“Dunbar and Boardman’s portfolio of services is the perfect match for our company,” says DrUlrich Klotz, Head of TÜV SÜD’s Real Estate & Infrastructure Division. “In recent years we have made enormous progress in creating an integrated range of consulting services and our customers are the primary beneficiaries. By acquiring the company, we can achieve several strategic objectives at once.” These objectives span further consolidation of TÜV SÜD’s position on the UK real-estate market, as well as the company’s plans for global establishment and expansion of consulting services from its Real Estate & Infrastructure Division. “TÜV SÜD’s acquisition of Dunbar and Boardman has given us the status of market leader,” explains Michael Valente, CEO of the Western Europe Region at TÜV SÜD. With almost 60 employees at 12 locations in the UK, and further offices in Dublin and Dubai, Dunbar and Boardman provides a full range of consulting services for the installation, operation and maintenance of lift systems. TÜV SÜD thus now occupies an excellent starting-position from which to roll out further services in the UK and extend its integrated consulting services for the real-estate sector to this market. “Vertical Transport and Facade Access inspections are areas of core business for TÜV SÜD,” notes Peter Boardman, co-founder of Dunbar and Boardman Partnership Ltd. “I am therefore delighted that our company can extend this core business into consultancy and continue our successful development under the umbrella of the TÜV SÜD Group. We look forward to contributing our experience and advancing the range of consultancy services on offer.” ( Continue reading

Consulting Sector M&A Deals for week beginning 5th October

businessman doing handstand on the beachErnst & Young France (France) acquired Bluestone Consulting (France)
Deal Size: Undisclosed Industry: IT Consulting Date: October 2015
The Advisory business of EY has acquired Bluestone Consulting, an analytics and big data consultancy based in France. The deal boosts EY’s capabilities in the analytics space, bringing the total number of data scientists in France to 130. With the addition of Bluestone Consulting, EY boosts its data analytics capabilities in France and the broader EMEIA region, says Andrew Embury, EY Advisory Leader EMEIA. “The acquisition of Bluestone Consulting comes at a crucial time as today’s organisations are becoming increasingly data driven and are looking to harness data and analytics to make better decisions and accelerate their business performance. By combining our strengths, EY will be in a stronger position to help our clients address their big, complex business issues.” As part of the integration, former Bluestone Consulting leaders Arnaud Laroche, Xavier de Boissieu and Pierre Capelle have joined EY in France and will lead the new combined team along with EY’s Karim Ben Djemiaa. According to Laroche, who previously led Bluestone Consulting, the joining of forces with EY will provide his firm and its employees the opportunity to do what it has been doing for the past 15 years “on a much bigger stage.” (

Koninklijke Philips N.V (Netherlands) agreed to acquire Blue Jay Consulting, LLC (USA)
Deal Size: Undisclosed Industry: Healthcare Consulting Date: October 2015
Royal Philips announced that it has signed an agreement to acquire Blue Jay Consulting, a leading provider of consulting services to hospital emergency departments in the U.S. The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter of 2015. “Our customers are increasingly asking us to help them improve patient engagement and operational efficiencies across their enterprise,” said Jeroen Tas, CEO Healthcare Informatics, Solutions and Services. “The ability to augment our health technology offering with consulting services is therefore a critical element of our integrated solutions. With the acquisition of Blue Jay Consulting, Philips is further executing on its strategy to strengthen its capabilities to enhance the operational and financial performance of hospitals and health systems, while enhancing outcomes for both hospitals and patients alike.” In the past three years, Philips has significantly strengthened its capabilities in consulting services and business model innovation in health care. This has, for example, resulted in the recently announced long-term enterprise managed services partnership with Westchester Medical Center Health Network in the state of New York. The acquisition of Blue Jay Consulting will further expand these capabilities, primarily in the U.S, but also globally. ( Continue reading

10 essential parts to a sales engine for your consulting firm

Sales & Marketing business signpost

When it comes to selling a consultancy firm, a sales and marketing deficit can expose the firm to three equity value risks:

  1. Any business that does not invest in sales is less likely to scale to a sellable size with enough equity value for owners
  2. Without a demonstrable process, data or evidence to show revenue growth is within your control, buyers are less likely to have confidence in your long-term forecast or place any value on it
  3. The most damaging ‘deal breaker’ event in a sales process is revenue results dropping off during due diligence, and that is the risk you run without a sales engine.

A sales engine keeps your pipeline brimming with new opportunities and booked work. It gives your consultancy the luxury of controlling how fast the business can scale. Then when you sell, it will add significantly to the value a buyer places on your firm.

Here are ten essential components in a sales engine any consulting firm should adhere to:

1. Invest – This is an investment, not a cost, so allocate resources to your sales engine; about 4-8% of revenues as a rule of thumb

2. Automate – You will not be able to operate your sales engine as you scale without automation, or you will soon lose business by being out of control with your contact base. Therefore invest in integrated website, CRM and email systems that talk to each other

3. Messages – Spend some time understanding your audience needs and wants, then tailor your messaging to what they want to hear, making sure it’s something they can relate to

4. Content – Content is King. Developing relevant, engaging content is a non-negotiable element of the sales and marketing process

5. Database – it is important to continue to grow your database either by acquiring them organically or from a third party. You should aim to establish and maintain complete coverage of your target market

6. Campaigns – Now that you have content to share and a robust database, run an intelligent selection of campaigns to reach your target market

7. Measure – If you can’t measure it, don’t do it. Measure the results of all your campaigns to improve efficiency and effectiveness of the sales engine

8. Leads – It is important to manage any lead you develop. Make sure to follow-up all leads even after the initial interaction

9. Pipeline – Once a lead becomes a prospect, manage and build the relationship by maintaining frequent interaction with your key contact

10. Clients – Leverage the relationships you have with clients. To further your sales pipeline, remember to measure client satisfaction and ask for referrals

Once a consultancy firm has executed all of the above and can maintain the sales engine when the time comes to sell, it will be in a stronger position to:

  • Demonstrate a historic track record of revenue growth – assuming you have also been managing gross and net margins as well
  • Buyers might initially be sceptical about your forecast, but with historical data you’ll be able to reassure them of the reliability of your future sales pipeline

All of these combined will give a buyer confidence in the future potential of the business, thereby allowing you to command a premium price for your consultancy on favourable terms.

If you’d like to read more about building a sales engine, please read the full article here. 

You might also be interested in watching our webinar on using the sales and marketing process effectively.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners grow and realize equity value in their business. Register here to gain full access.

Consulting Sector M&A Deals for week beginning 28th September

businessman doing handstand on the beachAccenture plc (Ireland) agreed to acquire Sagacious Consultants, Llc (USA)
Deal Size: Undisclosed Industry: Healthcare Consulting Date: September 2015
Accenture announced that it has finalized its agreement to acquire Sagacious Consultants, an electronic health record consulting practice, to expand capabilities for helping clients to better manage healthcare quality, efficiency and costs. Approximately 250 employees from Sagacious Consultants will bring to Accenture their specialized skills in implementation, systems integration, upgrades and optimization of EHR solutions from Epic Systems Corporation. The acquisition will expand the capabilities of Accenture to help clients realize the benefits of EHR systems, thereby improving clinical and business outcomes. Sagacious Consultants, recognized as the 2013 Best in KLAS for Clinical Implementation Services, will bring extensive expertise in healthcare IT, information solutions, optimization, data analytics and data warehousing for Epic-related systems. “As the global EHR market continues on a trajectory that will surpass $22 billion this year, there is a critical need for medical IT specialists who can help healthcare systems maximize the utility and impact of digital health records,” said Kaveh Safavi, managing director for Accenture’s global healthcare business. “Sagacious will enhance our capabilities, expertise and ability to drive transformational outcomes for our clients.” (

Synechron Inc. (USA) acquired Crossbridge (UK)
Deal Size: Undisclosed Industry: Financial services Date: September 2015
Established in 2008, Crossbridge is a specialist consultancy focused exclusively on Financial Services which helps clients address critical business priorities covering technology, operational strategy and change. The acquisition deepens Synechron’s strong financial services expertise and expands its offerings to include Business and IT Transformation, Regulatory Services, Data, and Financial Crime. The deal extensively augments Synechron’s Consulting expertise and consolidates its footprint in the London financial services community and the European market. Speaking about the acquisition, Tony Clark and Richard Squire, Managing Partners of Crossbridge said, “Our clients have been looking to us to rapidly grow the Crossbridge consulting services, capacity and global footprint, so joining forces with Synechron is a great strategic move. We are delighted to be part of a team with technical depth and scale which is absolutely well aligned with our Transformation, Regulation, Financial Crime, Data and Digital practice areas. In a rapidly evolving market, we believe that the amalgamation of Synechron’s technical consulting focus and Crossbridge’s business consulting capabilities creates a truly leading full lifecycle financial services consulting proposition”. (  Continue reading

The importance of focus for consultancy success


Where a consultancy looks for revenue is an indication of the level of focus. This is best done by identifying and focusing on a particular group of people or organizations with specified needs that your proposition addresses (a ‘needs group’). A needs group is often defined by a particular industry or sector and it is usually the case that a consultancy is easier to sell if it has a specific industry focus. However, the needs group could be industry independent, for example you may target senior executives requiring leadership training across different sectors.

Focusing on specific needs groups simplifies and clarifies where marketing activity is directed, intellectual property is developed and expertise deepened. A consultancy that has a razor-sharp focus will look for business within a specific needs group and will not market outside that group. By concentrating on work where you have a ‘right to win’, there is more likelihood of winning the work and by only taking on work that aligns with the strategic aims of the business, the value of the business is more likely to increase.

In all needs groups there are issues that have been established for some time; there are current topics which are hot and need to be addressed quickly; and there are future trends which are just emerging and which will require action soon. A weak proposition will be perceived by clients as being generic and not focused on their specific needs. A base level proposition will be seen as addressing well-established needs; an advanced proposition will address current hot topics; and a more advanced proposition will also address emerging trends. The most valuable proposition of all will lead clients to perceive the business as being the thought-leaders for their needs group and the go-to experts.

An example of a proposition indicating underlying thought leadership and specific expertise might be the ability to facilitate regulatory-driven change in the banking sector, requiring deep sector knowledge and specific knowledge of the regulatory impact, in addition to the broader ability to implement change.

If you are a start-up consultancy, it is not unusual for you to take work wherever you can get it – you have to eat! As the business grows, however, it becomes increasingly important to develop focus in order to drive growth and maximize attractiveness to future buyers.

It is worth regularly reviewing your consultancy’s focus to ensure that you are concentrating efforts on the clients and sectors where you have the most right to win. Effort spread too thinly will lead to your offer being less attractive to both clients and potential consultancy buyers.

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