August 2016: Consulting Market Update

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Consulting M&A Activity and Equiteq Consulting Share Price Index Performance

In August, we saw some notable deal activity from regular buyers of consulting businesses and mixed performance from listed players contained within the Equiteq Consulting Share Price Index.

The share prices of consultants focused on cyclical industries, particularly the energy sector, were impacted by volatile oil prices and the release of favorable U.S. and European economic data in the month. We also saw some earnings announcements from listed professional services businesses, most notably from prolific consulting buyer WPP, whose earnings for the first half of the year highlighted that the advertising giant had benefited from the U.K.’s vote to leave the European Union as a favorable currency translation more than offset any negative effect of Brexit on the British economy. WPP’s shares rose following this earnings announcement by as much as 5.7%, its biggest intraday gain in almost 3 years.

There was continued notable activity in the month from professional services buyers, building on their growing Channel 2 (non-Assurance) offerings. The most notable professional services deal in August was EY’s acquisition of Society Consulting, a 150-person Seattle-based specialized analytics consulting firm. Growth in the consulting businesses of large accounting players has countered falling profitability from some of these firm’s assurance businesses, which are feeling the impact of increasing competition and the technological automation of elements of the statutory audit. In line with this trend, PwC UK announced at the end of the month that it will be recruiting over 1,000 new specialists by 2020 to meet increasing client demands for cyber security and privacy, data management and predictive analytics, as well as business systems and technology risk and controls. This week, Deloitte UK also announced its fastest revenue growth in 10 years, noting a strong year for its already well established advisory business, highlighting high levels of demand for M&A, risk management & regulatory, as well as business transformation capabilities using technologies such as digital, cloud and analytics.

We also saw two landmark acquisitions, Dentsu Aegis Network’s acquisition of leading US marketing agency Merkle, and EQT’s acquisition of US-based healthcare analytics business Press Ganey. Both of these deals were discussed in further detail in connection with broader M&A trends that we are observing in the media consulting and U.S. healthcare-analytics space as part of our Deal Insight blogs.

Equiteq was also pleased to announce that our client PMSquare, has merged its Australian and Asian businesses with Cornerstone Performance Management.  We were also delighted to support specialist property consultancy, GBR Phoenix Beard, in its sale to Savills UK.

Selected Consulting M&A Deals Announced in August:

Arthur J. Gallagher & Co. Acquires UK-Based Orb Financial Services Ltd.
Deal Size: Undisclosed Industry: Financial Services Date: August 02, 2016, Target Location: U.K.
Arthur J. Gallagher & Co. announced the acquisition of Orb Financial Services Ltd. in Surrey, England. Terms of the transaction were not disclosed. Orb Financial Services specializes in group risk and healthcare coverage, workplace pension schemes and auto-enrollment, travel and dental insurance, and keyman and partnership protection for the financial services industry.

Cognizant acquires Idea Couture, boosts digital design capabilities
Deal Size: Undisclosed Industry: IT Consulting Date: August 03, 2016, Target Location: U.S.
Cognizant has acquired Idea Couture, a creative design and consultancy agency, for an undisclosed sum. The acquisition further boosts its Cognizant Digital Works practice, as more and more clients seek to leverage innovative design within new customer and employee user experiences for digital applications.

FlashPoint Adds California Firm
Size: Undisclosed Industry: IT Consulting Date: August 03, 2016, Target Location: U.S.
Indianapolis-based FlashPoint has announced the acquisition of Sonoma Leadership Systems in California. FlashPoint says the two consulting firms have a combined 150 clients.

JENSEN HUGHES Acquires CASE Forensics Corporation
Deal Size: Undisclosed Industry: Engineering Consulting Date: August 03, 2016, Target Location: U.S.
JENSEN HUGHES and CASE are two of the leading firms in the forensic science and engineering consulting industry and this combination increases the technical expertise and resources available to both firms.

EY acquires US consulting firm
Deal Size: Undisclosed Industry: Digital Analytics Date: August 03, 2016, Target Location: U.S.
EY has acquired Seattle-based analytics and big data consulting firm Society Consulting. Its services include web development, dynamic content strategy, content management, personalisation, segmentation and campaign execution. The acquisition will enable EY to help clients design, build and deploy a complete set of experiences for customers, employees, providers and other stakeholders.

BDO USA continues expansion with Florida acquisition
Deal Size: Undisclosed Industry: Professional Services Date: August 04, 2016, Target Location: U.S.
Coral Gables, Florida-based Goldstein Schechter Koch is being absorbed by national accounting and consulting firm BDO USA. Chicago-based BDO has been aggressively expanding, completing 19 deals over the past four years to grow the firm’s footprint into 23 new markets and expand its presence in 12 others.

Wipfli acquires California health care consulting firm
Deal Size: Undisclosed Industry: IT Consulting Date: August 04, 2016, Target Location: U.S.
Wauwatosa-based accounting and business consulting firm Wipfli LLP has acquired Oakland, California-based health care consulting company HFS Consultants. The transaction was completed August 1 for an undisclosed price.

Dentsu acquires US marketing agency Merkle
Deal Size: $1.5bn (rumoured) Industry: Digital Media Date: August 08, 2016, Target Location: U.S.
Dentsu Aegis Network, the network of media agencies that sits within Japan-based advertising holding company Dentsu, has acquired US marketing agency Merkle in a deal worth more than $1 billion. Merkle claims to be the largest independent data analytics, CRM (customer relationship management), and performance marketing agency in the US.

Surbana Jurong acquires SMEC to be one of Asia’s largest consultancy powerhouses in urban & infrastructure developments
Deal Size: $400m Industry: Engineering Consulting Date: August 09, 2016, Target Location: Australia
Surbana Jurong’s 100% acquisition of SMEC for approximately $400 million will significantly transform both companies. With Surbana Jurong and SMEC bringing complementary strengths to the table, the combined entity will have a global workforce of 9,800 employees in over 95 offices across 40 countries in Asia, Australia, the Middle East, Africa and the Americas.

Press Ganey Enters into Definitive Agreement to be acquired by EQT
Deal Size: $2.35bn Industry: Healthcare Consulting Date: August 09, 2016, Target Location: U.S.
Press Ganey (NYSE: PGND), a healthcare performance improvement company, announced that it has entered into a definitive agreement to be acquired by EQT Equity fund EQT VII (“EQT”), part of the global private equity group EQT.

Savills strengthens Midlands position with GBR Phoenix Beard acquisition
Deal Size: Undisclosed Industry: Property Consultancy Date: August 12, 2016, Target Location: U.K.
Savills UK has announced the acquisition of property consultancy GBR Phoenix Beard Holdings Ltd. The combination of Savills and GBR Phoenix Beard will create a leading advisory firm in Birmingham, with a particularly strong position and client offering in property management, agency, building surveying and investment.

Burnetts buys planning consultancy
Deal Size: Undisclosed Industry: Professional Services Date: August 12, 2016, Target Location: U.K.
Law firm Burnetts has bought a planning consultancy as part of its bid to offer a comprehensive property law service to clients. Together, the new team will be able to support clients throughout the full planning process including planning applications, site development and appeals.

Midwest Litigation Services Acquires Flynn Court Reporting
Deal Size: Undisclosed Industry: Litigation Services Date: August 11, 2016, Target Location: U.S.
Legal Services, a court reporting, videography and trial consulting firm with offices in Little Rock and Fayetteville, Arkansas. Flynn’s mission statement aligns perfectly with that of Midwest, providing a natural fit between the two companies:  to provide the highest quality customer experience by anticipating client needs, immediately responding to requests and providing state-of-the-art litigation-related services, technology and support.

Dentsu Merges Two of Its Consulting Firms under Isobar Brand
Deal Size: Undisclosed Industry: Marketing Consulting Date: August 11, 2016, Target Location: China
Dentsu Aegis’ Isobar will launch a new unit by merging its consulting capabilities with those of two corporate siblings at Dentsu, the agency announced on Thursday. Copernicus Marketing and Forbes Consulting, both subsidiaries of Dentsu, will be merged as an integrated division under the Isobar agency network. David Forbes, founder of Forbes Consulting, and Peter Krieg, founder of Copernicus, will lead the Marketing Intelligence Practice as co-VPs of Isobar US. With the change, Forbes Consulting and Copernicus will cease to exist as standalone brands.

PCG Acquires BLEgroup to Expand Offerings to Schools and Ed Tech Providers
Deal Size: Undisclosed Industry: Professional Services Date: August 15, 2016, Target Location: U.S.
Founded in 1994, the BLEgroup is based on the premise that effective education depends on the quality of digital products and the management capacity of schools. The BLEgroup has cultivated a unique position within the education consulting space, working with education technology providers (e.g. software, services, and digital content companies) to provide market research and insights on effective products for K12.

Sensiba San Filippo Acquires Resultants
Deal Size: Undisclosed Industry: Professional Services Date: August 16, 2016, Target Location: U.S.
Sensiba San Filippo LLP (SSF), a leading San Francisco Bay Area accounting and business consulting firm, is pleased to announce the acquisition of The Resultants, Inc., a boutique sized consulting firm specializing in internal audit and SOX compliance services. The acquisition looks to expand Sensiba San Filippo’s consulting practice and grow their presence in the publicly held company space.

Asian IT consulting firms PMsquare and Cornerstone strike merger
Deal Size: Undisclosed Industry: Professional Services Date: August 16, 2016, Target Location: Australia
Both PMsquare and Cornerstone Performance Management focus on the IT consulting segment of the consulting industry. PMsquare was established in Sydney in 2008 and expanded to Singapore in 2011 and the Philippines in 2014. The firm specialises in Corporate Performance Management (CPM) and Business Analytics solutions, providing expert advice around the entire implementation process from license reselling, scoping and design to implementation (project management, training, post go-live support).

Heidrick & Struggles International to Acquire Leadership Consulting Boutique Philosophy IB
Deal Size: Undisclosed Industry: Professional Services Date: August 18, 2016, Target Location: U.S.
Philosophy IB was established in 2000 by founding partners Christine Lotze and Kaveh Naficy. Today it serves Fortune 100 companies, focused on helping clients execute their strategies by changing how people work. Twenty-five employees will join Heidrick & Struggles–including Lotze, Naficy and Stephen Tavares as partners–when the transaction closes following the completion of customary closing conditions.

Accenture to acquire security services firm Redcore
Deal Size: Undisclosed Industry: Professional Services Date: August 23, 2016, Target Location: Australia
Technology outsourcing company Accenture announced its deal to acquire Redcore, a consulting company that specializes in providing identity and access management services (IAM).
Founded as a privately held IT company in Australia in 2010, Redcore offers security services for Cloud, network management, public key infrastructure, cyber defense, applications and the internet of things (IoT).

Ramboll acquires two German onshore wind energy consultancies
Deal Size: Undisclosed Industry: Professional Services Date: August 30, 2016, Target Location: Germany
BBB Umwelttechnik is a Germany-based technical consultancy and project management firm, focused on sustainable and renewable energy. The firm, founded in 1996, is focused primarily on wind-energy projects – from feasibility studies to measuring wind speeds – although the firm also performs studies for biomass and solar energy projects.

Morse Consulting to join Deloitte
Deal Size: Undisclosed Industry: Professional Services Date: August 30, 2016, Target Location: Australia
Morse Consulting will join Deloitte Australia from 1 September, following Deloitte’s acquisition of Casey Quirk in June. Deloitte said the Morse Consulting team would join Deloitte’s investment and wealth advisory team in Sydney and Melbourne, and that the terms of the transaction had not been disclosed.

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