A range of factors contribute to how strategically attractive a target is to a potential buyer. While different buyers will place different emphasis on these factors, to appeal to the widest number of buyers a consultancy should aim to stand out in as many of these areas as possible.
Sector attractiveness can be judged in two ways. Is the consultancy operating in a sector which is already attractive? Or are there clear drivers of demand in a hot sector? An example of the latter is the current trend for data architecture and management involving the move from hardware to the cloud. With more and more companies changing the way they store their data, consultancies operating in this area are in high, and growing, demand. In the media space, digital marketing consultancies are seeing high demand for their expertise.
In our extensive experience of working with thousands of owners over the years, within the universe of owners of consulting firms you will fall into one of four groups when it comes to value realization aspirations:
- I’m blissfully ignorant and have not even thought about it!
- I will never want to sell because I have alternative business and life goals
- I may want to sell, but not sure if, how and when
- I have a clear goal to sell
If you fall into another group not mentioned please let us know what it is! Another reality is that you may oscillate between groups, depending on factors of change in your business and life. So let’s explore each group and identify the most common reasons why you may want to move up or down.
BTS acquires two Italian companies and strengthens Southern European position
Deal Size: Undisclosed Industry: Professional Services Date: July 6, 2016
STOCKHOLM, Sweden, July 6, 2016 (GLOBE NEWSWIRE) — BTS GROUP AB (publ), – BTS, a leading global strategy implementation firm, acquires the operations and certain assets and liabilities from Cesim Italia Srl and Design Innovation Srl based in Milan, Italy.
Cesim Italia, with some 34 employees and contractors earning revenues of about 3.5 MEUR 2015, offers Business Acumen, Leadership, Innovation, Change Management training and consulting services. Design Innovation is a boutique design house with six employees and revenues of about 0.5 MEUR specializing in innovation and design consulting services. Both companies have a long history of repeatedly serving major Italian companies.
Equiteq is pleased to announce that its client Solidiance, an Asia-focused management consulting firm, has acquired a Shanghai-based business strategy and M&A advisory firm, Technomic Asia. Equiteq acted as exclusive financial adviser to Solidiance in relation to the transaction, which was completed on 12th July 2016.
Technomic Asia’s 30-year history makes it an icon in the business community across China and in particular, Shanghai. As one of the most reputable advisors to foreign entities seeking to do business in China, Technomic Asia boasts a loyal client base of Fortune 1000 and mid-sized firms, which complements the standard portfolio Solidiance has traditionally served.
To make the sales process as smooth as possible, it’s best that the buyer is not given any unwanted surprises. As the owner of one consultancy that you feel you know inside and out, it’s easy to forget that buyers may look at hundreds of potential acquisitions a year. Often at the first sign of something that concerns them they will simply move on to the next potential acquisition. To build their confidence and indicate to them that you are ready for a sale, there are several areas to consider.
When selling, or planning to sell, a professional services firm, it is important that the key personnel who are crucial to the on-going performance of the company are aligned to the majority shareholders’ exit goals. Without this alignment, they could be a less potent force in making those goals happen. Consider phantom shares as an alternative to employee share plans, in order to get that alignment in place.
What are phantom shares?
In simple terms, phantom stock does not include any real stock, it is like a cash bonus plan linked to the success of the company, where the timing, magnitude and phasing of the payout is determined by the deal terms you get in a liquidity event, such as your firm being acquired. Just like other forms of stock-based compensation plans, phantom stock serves to align the interests of recipients and shareholders, but without the same level of cost, complexity, and risks associated with a share scheme.
Accenture Acquires Maglan, Expands Security Services in Israel
Deal Size: Undisclosed Industry: IT Consulting Date: June 20, 2016
NEW YORK; June 20, 2016 – Accenture (NYSE: ACN) announced today it has acquired Maglan, a privately-held Israeli cybersecurity company specializing in offensive cyber simulation, vulnerability countermeasures, cyber forensics and malware defenses, and IT security research and development with a focus on threat intelligence. Financial terms of the transaction were not disclosed.
The acquisition brings to Accenture a team of highly skilled cybersecurity professionals, who honed their skills fighting cyber crime and confronting cyber espionage around the globe. The acquisition advances Accenture’s strategy of leveraging Israel as a cybersecurity innovation hub to provide clients with cross-industry cyber defense consulting. Maglan has specialized tools and methodologies that will augment Accenture’s full range of security services and defensive countermeasures, comprising strategy and risk management through enterprise and extended enterprise security.