Five minutes with Equiteq’s Gaby Silvestris

Gaby Photo

1. Name and job title

Gaby Silvestris, Director

2. What do you do at Equiteq?

I work in the Execution/Transaction Team in London. My job is to lead and support clients through the entire company sale process, advising shareholders on their exit strategy and maximizing value. This is comprised of several tasks, from preparing a compelling information memorandum and blind profile, addressing any areas of concern to potential buyers, identifying suitable strategic buyers and leading negotiations with preferred buyers, to closing the deal.

3. What do you think is the most interesting aspect of working with consultancies?

Whilst we specialize in consulting and knowledge-intensive business services companies, their skills are applied to a wide variety of industries (for example IT, property, cyber security consulting, etc). Furthermore, successful consulting businesses are built around very clever individuals who have managed to create a true ‘value added proposition’ in their fields of expertise. This makes every transaction unique, challenging and exciting in its own right.

4. What do you enjoy the most about working at Equiteq?

There is a great work environment and all my colleagues are top class; they all have different sets of skills that complement each other very well.

5. If you weren’t doing this job, what would you be doing?

Hmm that is a tricky question because I love what I do for a living. I get a great buzz from closing deals! I guess that if I was being pushed for an answer, I would be a travel guide or something along those lines because I really enjoying travelling and recommending my pick of the top 5 ‘must do/visit’ after every trip to my friends.

6. What is the proudest moment of your career?

Every time I close a transaction I get a great sense of achievement. No deal is perfect, there are always some bumps and challenges to overcome in every transaction. I think, it would be unfair to choose one in particular. When I started my career in corporate finance, my mentor told me ‘you are only as good as the last deal you closed’. So many years later, this still resonates with me and keeps me motivated to get even more deals under my belt.

7. What’s the most interesting experience you’ve had recently outside of the world of work?

Swimming with big groups of wild dolphins in the Indian Ocean. I love animals and love seeing them free in their natural habitat.

8. What is the most powerful lesson you’ve learnt in your career? 

Assume nothing and double check everything.

If you’d like to contact Gaby, please email her on

Consulting Sector M&A Deals (January to mid-February)

businessman doing handstand on the beachKellton Tech acquires US firm Bokanyi Consulting
Deal Size: Undisclosed Industry: IT Consulting Date: January 2016
Kellton Tech Solutions Limited, a Hyderabad-based IT services and solutions company, has acquired Bokanyi Consulting, a cloud and analytics services provider based in Houston, US, with revenues of $8 million last year, for an undisclosed amount. Kellton Tech funded the entire acquisition through internal accruals. The acquisition demonstrates Kellton Tech’s continued investment in ISMAC (Internet of things, social, mobile, analytics and cloud) and its resolve to further strengthen its core focus. With the US already contributing substantially to Kellton Tech’s revenue, the move will further improve its in-region support and help it to cater to the increasingly profitable mid-markets, the company said in a press release on Wednesday. Bokanyi, an expert in serving the mid-market IT needs of customers across 12 countries, is the second acquisition that Kellton Tech has made in less than a year. The company had, in June 2015, acquired US-based enterprise solutions and business integration provider ProSoft Group, for $14 million in an all-cash deal. “As we merge Bokanyi’s proven enterprise technology expertise, that complements our ISMAC focus, we look forward to a myriad of new business opportunities while leveraging the cross-selling possibilities brought forth through this acquisition. We are confident of a seamless integration, and expect the unique synergies from the alliance to enable us to offer greater scale and superior range of transformational services,” said Niranjan Chintam, founder and chairman of Kellton Tech. (

PWC agree deal to buy customer experience consultancy Outbox
Deal Size: Undisclosed Industry: IT Consulting Date: January 2016
European customer experience consultancy Outbox has been acquired by PWC, bringing PWC technology practitioners to 3,000 across EMEA. Nicholas Mobbs, British entrepreneur and co-founder of Outbox, has spoken how this is a milestone for the technology sector as PWC strengthens its operations in Central and Eastern Europe, the up and coming technology skill powerhouses in the world. PWC is hoping the deal will bolster its ability to offer specialised cloud-based solutions and transformational services for clients across the UK and Europe. The Polish-based Outbox specialises in customer, digital and technology services working with leading platforms such as Salesforce, Microsoft Dynamics, Oracle and SAP. Its addition will further enhance PwC’s cross-industry customer and digital capabilities to deliver innovative solutions across all channels, platforms and devices. The deal comes after previous acquisitions by PwC, including the European consultancy Mokum, and Booz & Company (now Strategy&), in 2014. The addition of the Outbox Group will increase the firm’s contingent of technology practitioners to almost 3,000 across EMEA. More than 250 Outbox employees will join PwC. PwC’s UK and EMEA Consulting Leader, Ashley Unwin, said: “This acquisition represents a major milestone for PwC’s UK and Central and Eastern Europe alliance and its commitment to invest in emerging markets. “It is also a significant addition to our customer and digital capabilities and sees the establishment of a Centre of Excellence for these skills within PwC in Europe.”PwC’s UK and EMEA Technology Consulting Leader, Jonathan Tate, commented: “Our clients are prioritising growth and investing to deliver great experiences to their customers. “This acquisition was driven by a rising demand from our clients in digital and customer transformation as well as the need to offer services from strategy through to execution. “Outbox will allow us to present a truly differentiated offering, enabling us to deliver larger and more transformational solutions to businesses across the UK, Poland and the rest Europe. It will also support one of the firm’s strategic priorities to further embed technology into its services.”Outbox managing director, Nicholas Mobbs, who will join PwC as a partner added: “We created Outbox 10 years ago in Poland. Through dedication and hard work we have tapped into the wave of disruptive technological change, leading to considerable success across Europe with our unique position around a customer first multi-technology strategy. “This deal will provide PwC with the ability to offer a unique combination of world class skills and services, by delivering true cloud-based business transformation projects to the market and benefitting existing clients. The potential market for customer experience, CRM and digital is estimated at over 6 billion Euros and we see this growing even in challenging economic times.” ( reading

10 critical success factors for earn-outs: Part 2

The process of growth of income

In one of our recent blog posts we outlined why earn-outs are commonly used by buyers and looked at the first 5 considerations  to take into account when thinking about an earn-out. This week, in part 2, we look at the final 5 aspects to reflect on when it comes to earn-outs.

6. Set a realistic time period

The effluxion of time means that an earn-out is at risk from the vagaries of market conditions, customer losses, technological advancement and increased competition, to name just a few factors. A 2 or 3 year period is typical – obviously the shorter the better for a vendor. Our research highlighted that while the average length of earn-out was just less than 3 years, prolific buyers (those who bought more than 2 businesses per year) were more likely to prefer a shorter earn-out period. Knowledge of buyers’ behavior is invaluable in these negotiations.

7. Limit the basis of an earn-out to aspects of the business you can control post deal

For example, if your business is heavily reliant on marketing spend to achieve sales growth and post transaction you have no control of the marketing budget, then immediately you are putting the achievement of your earn-out at increased and unnecessary risk. A full assessment of the transaction situation pre and post deal will highlight any areas of concern.

8. Corporate overheads

Be aware of any ‘costs’ which might be added to your P&L by a buyer post transaction and which could limit your chance to achieve your targets. Knowing how a buyer will behave post transaction and getting these issues on the table for discussion early is a key role for any advisor.

9. Tax treatment

With any performance-based payment there is a risk that the tax authority in your jurisdiction will look to treat it as income rather than capital with the attendant increase in tax that comes with it. Get good tax advice early.

10. How should it be structured?

All or nothing earn-outs don’t tend to work, so typically a sliding scale with caps and collars to penalize underperformance and reward over performance are the norm. A thorough understanding of whether the buyer’s aims are purely financial or whether they are mostly strategic has an impact here.

Will it be possible to catch-up payments later? How is performance to be measured – quarterly, annually, on average?

There is considerable scope for an earn-out to go wrong which is why it’s important to get external advice on how to best structure them. Understanding the motivations of a buyer and then formulating a structure which meets those expectations, whilst protecting you as a vendor, is the ideal scenario. A buyer will want an earn-out to be achievable and so will take guidance from the vendor and their advisor about how best to structure it as a win-win.

To read the full article this blog is based on please click here.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners prepare for sale and sell their business. Register here to gain full access.

What to expect from Corporate buyers


Previously we provided an overview of the three broad categories of consulting firm acquirers – consulting, corporate and investment – and their key acquisition drivers. We then did a deep dive into what to expect from consulting firm buyers and now turn our attention to corporate buyers.

There are big differences between a company that makes most of its revenue from selling products or services and a consulting firm that sells advice. Consulting firms have a different business model, few to no tangible assets (as their people are their assets) and are often much smaller in scale compared to most corporate buyers.

Despite this, there are many examples of corporate buyers paying above market value for acquisitions of consulting firms. So what drives these types of acquisitions?

In practice, the drivers of corporate acquisitions of consulting firms tend to be specific to the sector and particular situation of the acquirer. However, when the differences between corporate and consulting firms are complementary, this can generate large synergy opportunities for corporate buyers to unlock additional future value. We’ll look at two common drivers of consulting firm acquisitions among corporate buyers in turn.

1. Acquiring up the value chain to drive additional down-stream revenue

It is not uncommon for consulting engagements to lead to a large body of work involving change and transformation within the consulting firm’s client. A consulting engagement dealing with changes to the strategic direction or operating model of a company will often result in a long tail of activity to implement and embed the change, as well as involving changes to the key partners or suppliers of the client.

For a corporate service provider, consulting capabilities that provide earlier engagement in a lifecycle of change may direct more revenues their way and also better control the type of service they inherit. As such for some corporate firms, the acquisition of a consulting firm whose work typically precedes the sale of their own offerings may be very attractive as an acquisition target to drive additional revenues.

In our experience, the ability to capture additional core revenue by adding a consulting or advisory capability tends to be a common driver for corporate buyers acquiring consulting firms. When considering corporate buyers, sellers of consulting firms should look across the lifecycle of their engagements and beyond their scope of work to consider the synergies they may offer corporate buyers.

2. Acquiring internal advisory capabilities to enhance the existing business

All companies operate in competition with changing market dynamics. Those that excel have a laser-like focus on improving their offerings in order to retain a competitive advantage. For this reason, many large companies have internal consulting divisions used to improve internal operations and external offerings, but also look to external consultants for specific areas of expertise.

By acquiring the right specialist consulting capabilities, the corporate buyer benefits from a long-term advantage that further enhances the value of their offerings, internalizes this supporting capability and prevents their competition from gaining that particular area of expertise.

Corporate buyers are constantly assessing acquisition opportunities that directly add to their top line. Conversely, the acquisition of a consulting firm that indirectly enhances its core offerings and improves internal efficiencies has an indirect impact. This can make it difficult for a corporate buyer to justify a consulting firm acquisition if the only reason is to gain internal consulting capabilities.

Sellers of consulting firms should think carefully about this type of acquisition. Buyers that pay premium deal values often do so because the seller provides significant immediate and future value to them that only the buyer can realize, above the standalone value of the target. The value premium is therefore often the result of a small proportion of future synergy value being ‘pre-paid’ by the buyer in the purchase priced to beat the competition. However, future synergies are more often driven by direct revenue synergies (cross selling, on selling, etc.) than the indirect revenue synergies (enhanced existing capabilities) described here. As such, an acquisition offer from a corporate buyer to gain an internal capability may not necessarily be the best offer in the market. So the best offer from a corporate buyer is likely to come from one who is both acquiring up the value chain and also gains from internal advisory capabilities.

In the fourth and final part in this series we shall be looking at investment buyers. If you’d like to see the full-length article this blog is based on please click here.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners prepare for sale and sell their business. Register here to gain full access.

10 critical success factors for earn-outs: Part 1

Earn-outs Cropped

If you’re planning on selling your consulting firm, it’s highly likely that the transaction structure will contain an earn-out. In fact, 90% of deals involving consulting businesses will have a structure which includes some sort of deferred payment, with most taking the form of an earn-out. Your objectives would normally be to maximize the up-front cash percentage and alleviate the earn-out terms. Therefore it is worth being aware of the complexities associated with earn-outs and having access to the knowledge which will allow you to structure it in the most sensible and beneficial way. Our Buyers Research has a chapter on earn-outs and you can access the report here.

Earn-outs can be used by a buyer for any number of reasons but some of the most common are:

  • To obtain commitment from the vendors post transaction
  • To introduce specific targets which are non-financial to ensure a smooth transition post deal
  • To mitigate a valuation based on the delivery of a high growth forecast
  • To lower the day one funding requirement; and
  • To bridge a gap in price expectations between vendor and buyer by allowing a higher headline value

Earn-outs are not one-size-fits-all and must be tailored for specific circumstances. However there are 10 over-arching considerations that should be taken into account. We’ll be looking at the first 5 in this week’s blog, with the final 5 to follow next week.

1. What should the earn-out target be?

Set it too high and it becomes a disincentive, too low and it won’t be incentive enough. The target should be achievable for the vendor and provide a mechanism which ensures good value, driving the right behaviors for the buyer.

It is difficult to provide qualitative advice on what a target should be as clearly every situation will be different; however you should consider the following:

  • Base the earn-out on your existing organic business plan as you should be able to deliver this as a standalone entity, and it should only be enhanced by the buyer’s infrastructure and client base – assuming minimal interference in the way you run the business
  • Whilst it is usual for a buyer to want to have a cap on the earn-out, it doesn’t normally make commercial sense for either party as the additional consideration from exceeding an earn-out is usually self-funding. Get a thorough understanding of what the combined business opportunity is, and use this to assess the risk of hitting earn-out targets
  • Conversely, ensuring you include adequate downside protection within the earn-out is also key. This should ensure you still receive some value from it, even in the case of missing the target. However, for obvious reasons, this is a much more sensitive discussion
  • Avoid linking large proportions of the earn-out to specific targets with binary outcomes

2. Avoid complex, many-variable structures

Complexity of earn-out structure makes it very difficult to negotiate and document legally during the transaction, and also difficult to measure post transaction. The result is excess negotiation during the process and subsequent arguments post deal.

Trying to make an earn-out achieve many different outcomes is fraught with difficulty. At its most simple an earn-out should drive behavior which creates value and growth for the acquirer.

3. What happens if you leave?

Ensure you know what happens to the earn-out payments if you have to leave part way through, either through your own choice or a forced exit. There are many ways to ensure that you are protected in this case.

4. Consider the implications to the integration process

Earn-outs can sometimes be a hindrance to integration of the vendor’s business into the buyer as typically the vendor’s business needs to be ring-fenced from a reporting and operating standpoint in order for the earn-out to be measured. This can destroy value for the buyer and also completely undermine the original rationale for undertaking the acquisition in the first place.

5. Earn-out payments rely on the financial viability of the buyer

Being satisfied that the buyer will still be solvent at the end of the earn-out period, or including protections in the sales documentation, is key.

Check back in next week for the second 5 critical factors for earn-outs. Or if you can’t wait, please view the full article this blog is based on here.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners prepare for sale and sell their business. Register here to gain full access.