The year in review: Equiteq Edge’s most popular blogs of 2015

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As 2015 draws to a close we thought it worthwhile to take a look back at the most popular blogs of the year. If there’s a topic you’d like covered in 2016 we’re always interested in hearing from our community, so please contact us here.

We’ll be taking a break from our blogs now until the New Year, when we’ll be back on the 7th of January. Until then, have a great festive season and we look forward to welcoming you back to Equiteq Edge in 2016.

1. Profile of a healthy consulting business: We’ve analyzed thousands of consulting and professional services firms over the past decade and have a unique perspective on the financial metrics of consulting firms.

2. Why branding for professional services consultancies matters. Part one: The sales and marketing process is one of our 8 Levers of Equity Value and branding is a key component of this. Part two can be read here.

3. Why do consulting firms with capable leaders get stuck?: Growing a consultancy is not easy; there is a reason only 1% ever break the $20m barrier. As a rule there are three different mindsets which lead to consultancies failing to scale as they should.

4. How best to manage utilization in a professional services business: Utilization can have a big impact on the bottom line and should be monitored carefully as, in our experience, firms that measure utilization regularly end up outperforming those who do not.

5. Six key principles for a value-driving compensation structure: By structuring compensation in the right way, it’s possible to accelerate growth by having everyone pulling in the same direction. It will also help the business retain its best people and ultimately will make the company more attractive to acquirers because of the culture and drive within the business.

6. Buyers’ view: Hot sectors update March 2015: Our analysis found that the first quarter of 2015 saw big demand from buyers in IT consulting, engineering/environment/energy and the media/marketing sectors.

7. Consulting firm M&A intelligence on cloud-based consulting: Cloud computing has become one of the world’s leading transformational technologies and consultancies operating in this sector are in hot demand.

8. Consulting firm M&A market intelligence on cyber security: As we all become more reliant on technologies such as smartphones and social media, businesses must be very careful with data security.

9. What deters the buyers of consulting firms?: Our research has identified that there are three top factors which dissuade buyers when it comes to making an acquisition.

10. Why do human capital consultancies plateau? Part one: You’d think that HR consultancies, with their focus on people, would have superior leadership abilities. However, they often fall victim to the same ‘Do as I say, not as I do,” as other consultancies. Part two can be read 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 7th December

businessman doing handstand on the beachThe TLM Group LLC (USA) merged with Rennaker Construction Consulting Inc. (USA)
Deal Size: Undisclosed Industry: Engineering Consulting Date: December 2015
The TLM Group LLC continues to grow to better service its clients nationally and internationally. With this in mind the company has announced that Rennaker Construction Consulting Inc. (“RCCI”) has merged with TLM. Combining these two companies provides customers with an expanded portfolio of unique and globally recognized service offerings in the mission critical industry. Both companies bring considerable talent to the mission critical industry and going forward are better positioned to serve our Clients’ needs. The company will continue to operate under the TLM Group LLC name and will maintain its main office in New York City. The TLM Group has been a trusted owner representative / project manager since 1999 counting many Fortune 100 companies as clients in the mission critical industry. TLM has managed mission critical projects with budgets upwards of $750 million and footprints of 5,000 sq ft to over 500,000 sq ft. RCCI recently completed a large data center in Sweden for a multinational social media client and will continue to service this client in multiple US and international locations over the next several years under the TLM Group LLC and TLM Mission Critical LTD entities. (http://www.missioncriticalmagazine.com)

Accenture plc (Ireland) to acquire Cimation LLC (USA)
Deal Size: Undisclosed Industry: IT Consulting Date: December 2015
Accenture (NYSE: ACN) has entered into an agreement to acquire Cimation, an affiliate of Audubon Companies and an Industrial Internet of Things (IIoT) consulting company that works in process automation, information technology (IT), and industrial control system (ICS) cyber security. Together, the companies will provide end-to-end services to transform industrial asset operations and maintenance for oil and gas, pipeline, chemicals, metals, and mining companies – from the sensors on field equipment, such as connected oil and gas wells, to boardroom performance reports. Terms of the transaction were not disclosed. The transaction supports the integration of enterprise IT systems and operational technology (OT) needed by resources industries to capitalize on opportunities such as automation solutions, production optimization, asset analytics, and ICS cyber security. As a result, companies can better maintain, operate, and optimize their wells, pipelines, refineries, chemical plants, and mines. Cimation’s approximately 200 people, most of whom are located in the US and Canada, will join the Accenture Asset and Operations Services group. The acquisition of Cimation marks Accenture’s second acquisition in recent months. In early November, Accenture completed its acquisition of Schlumberger Business Consulting (SBC), the management consulting unit of Schlumberger. For the upstream oil and gas industry, SBC provides consulting services in strategy, operations, people and transformation, capital projects, and mergers and acquisitions. (http://www.ogfj.com) Continue reading

Delivering a premium sale for GL Hearn

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GL Hearn (GLH), a market-leading UK property consultancy, approached Equiteq as part of its annual strategy development process to provide an assessment of the M&A market.

Through Equiteq’s Valuation and Market Risk Assessment (VMRA) methodology, the board of GLH gained a good insight into the strategic sale potential of the business, prompting a decision to sell. Based on our deep consulting transaction experience, we were appointed as the lead advisor for the sale. Eventually, GLH was sold to Capita for £30m in 2015, a valuation which substantially exceeded shareholder expectations.

The client’s situation

GLH approached Equiteq as part of its annual strategy review to provide an assessment of the M&A market and, in particular, the outlook for GLH in a strategic sale scenario. We utilized our proprietary VMRA tool to provide a thorough analysis, which the board of GLH incorporated into its decision-making process to sell the business.

Our approach

Following the initial workshop, we set to work preparing high-quality sales documentation and undertaking research into potential strategic advisors, drawing on our knowledge of the buyer universe and key value drivers for these buyers.

We identified and shortlisted the most likely buyers, and approached the shortlisted companies as a priority. This enabled the process to remain focused and efficient whilst maintaining confidentiality. The ultimate result was a number of credible offers for the business which Equiteq negotiated and improved before the shareholders selected their preferred party.

During the due diligence phase, the focus was on quick execution and maintaining value, both of which we were able to achieve though strong project management and supply of quality information to the buyer.

How did Equiteq deliver value to the client?

It was clear that GLH had been well positioned for growth in certain areas of the property consultancy market, with management having made a number of strategic investments during previous years in this regard.

  • We presented these investments carefully; alongside the opportunity they created for a potential buyer, adjusted the historic performance of the business to show the strong underlying growth trend.
  • This led to a significant interest in GLH from the buyer community, soliciting a number of well-structured and valuable offers from credible international buyers.

This allowed GLH to make an informed and positive choice about which partner to consummate a transaction with.

Ultimately Equiteq achieved a premium valuation in excess of the GLH shareholders’ expectations and a final sale value of £30m.

To read some of our other case studies, 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 30th November

businessman doing handstand on the beachLogicalis Group Limited (UK) acquired Thomas Duryea Consulting Pty. Ltd. (Australia)
Deal Size: Undisclosed Industry: IT Consulting Date: November 2015
Logicalis, an international IT solutions and managed services provider, announced it has acquired Thomas Duryea Consulting, a leader in designing, building and deploying data centre, data management, enterprise information systems, systems management and cloud environments for mid-sized and large enterprises. Mark Rogers, Logicalis CEO, comments: “This acquisition is strategically important for Logicalis, building strength and additional scale into our Australian operation, while Thomas Duryea’s deep professional services capabilities in desktop, data centre, storage and cloud are a perfect fit with Logicalis Australia’s existing expertise. As a result, the combined businesses represent a very compelling value proposition for customers and will strengthen our relationship with key vendor partners EMC, Dell, NetApp, VmWare and Microsoft.”  (http://www.prnewswire.com)

Accenture plc (Ireland) acquired Schlumberger Business Consulting (USA)
Deal Size: Undisclosed Industry: Management Consulting Date: November 2015
Accenture has completed its acquisition of SBC (Schlumberger Business Consulting), the management consulting unit of Schlumberger. The acquisition was first announced on August 17. SBC employees and knowledge assets now form part of Accenture Strategy, strengthening its ability to help the world’s major energy exploration and production companies achieve greater competitiveness and growth. In particular, Accenture Strategy is now better positioned to support upstream oil and gas companies to enhance operational agility, accelerate their digital transformation and improve their portfolio optimization. “The upstream energy sector faces a range of challenges and opportunities, from delivering complex capital projects to exploiting technological advances,” said Arthur Hanna, energy industry lead, Accenture Strategy. “Our capabilities in business, digital and technology strategy complement the upstream business, organizational change and operations expertise that now have become part of Accenture Strategy. As a result of the acquisition, Accenture Strategy is better placed to support clients in the field, across the enterprise and as they pursue market opportunities and upstream partners.” (http://www.newtechmagazine.comContinue reading

Supporting client growth and new business through your market proposition

Sales ProspectionThere are a range of statistics around how important retaining clients is to a company’s bottom line. According to the Gartner Group, 80% of your future profits will come from just 20% of your existing customers. And Bain and Co say that a 5% increase in customer retention can increase a company’s profitability by 75%. So there is a clear case to be made for looking after your current clients and your market proposition plays an important role in this.

The best propositions enable your business to establish long-term relationships with your clients that deliver cumulative benefits to them and increasing revenue to you. By contrast, the weakest propositions only enable one-off engagements (sometimes known as “one and done”) with no opportunity for follow-on work.

The Holy Grail for long-term client relationships is to: analyze; change; operate. In other words, analyze a problem, change the environment, then operate the new process. Accenture are masters of this with their capability of managing entire functions for their clients in an outsourced model, often as a result of diagnosing the root causes of problems and improving the processes, systems and organization along the way.

When it comes to winning business from new clients, the best propositions enable your business to attract new clients based on a clear “right to win.” Consultancy cannot be easily tried before being bought, so the proposition must be true, relevant and provable so that clients have confidence in entering into an engagement with you. By contrast, the weakest propositions do not facilitate your ability to develop business with new clients.

Imagine selling $10 bills for $5 in the street. You wouldn’t have to be a world-class salesperson to attract many customers. Now imagine trying to sell $5 bills for $10 and see how good your sales skills have to be to sell just one. Your business proposition needs to be compelling and feel like the former to the client, so they feel they are getting real value.

Getting your market proposition right means that it will be appealing to clients you already have but also help you to continue to win new business. This should help your consultancy grow steadily and profitably, making it an attractive proposition to the right acquirer.

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.