September 2016: Consulting Market Update

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

In September, we saw a number of high-profile deals being announced, particularly amongst buyers in the IT consulting and broader technology sector. This month also saw the performance of many listed consulting players contained within the Equiteq Consulting Share Price Index being positively impacted by macro-events such as poll results following the debates in the lead up to the U.S. elections and OPEC’s tentative agreement to cut oil production.

Accenture, a listed consultant tracked within the Equiteq IT Consulting Share Price Index, reported quarterly earnings above estimates, highlighting strength in their new bookings and an expansion in their profit margins. The announcement was followed by a 4% jump in their share price.

Accenture remains highly acquisitive, announcing three notable acquisitions this month:

  • DayNine, a leading 400-person global Workday consulting firm. The acquisition builds on past acquisitions by Accenture to strengthen its enterprise cloud services offering.
  • Kurt Salmon, a retail-focused consulting business and part of Management Consulting Group plc (MCG) was acquired for $165m in cash payable on completion. MCG’s disposal of Kurt Salmon follows recent exits from its healthcare and French operations, leaving MCG focused on its international operational performance consulting subsidiary Alexander Proudfoot.
  • OCTO Technology, a French IT consulting business focused on digital transformation and software development. The deal valued OCTO at €115m.

At the end of the month, Accenture’s rival, IBM, also announced a notable transaction to acquire Promontory, a leading 600-person financial and risk management consulting business. IBM expects to combine Promontory with Watson, the firm’s artificial-intelligence system, to help financial institutions with rising regulatory burdens in areas like anti-money-laundering and bank “stress tests”.

In September we also saw two transactions involving leading strategy houses: McKinsey and The Boston Consulting Group:

  • McKinsey builds on its digital capabilities with the acquisition of PriceMetrix, a Toronto-based data analytics firm focused on the wealth management sector.
  • The Boston Consulting Group announced that it would acquire a 130-person German procurement and supply chain management consulting specialist, Inverto.

As we anticipated in our last quarterly update, there is continued deal activity amongst the large hardware and software players. This month:

  • Dell completed its record $60bn acquisition of EMC Corporation.
  • Hewlett Packard Enterprises (HPE) announced that it will further restructure its operations with the sale of its software business to the UK’s Micro Focus for $8.8bn. The deal will result in the majority of HPE being focused on hardware and Micro Focus becoming one of the leading European software players.
  • Intel announced that it will agree to sell a majority stake in its cyber security unit to private equity firm TPG, in a deal which values the business at $4.2bn. Rumors of the sale had appeared in summer, with private equity firms Thoma Bravo, Permira and Vista Equity Partners rumored by Bloomberg as having conducted preliminary research in case of a sale.

This month, we were delighted to advise:

  • UK private equity firm, Livingbridge, on its investment in clinical consulting business, Four Eyes Insight. Equiteq provided commercial advice and detailed operational guidance to help validate the investment case and provide a roadmap for rapid scaling and equity growth.
  • The owners of London-based Harlex Consulting on their sale to German listed software and transformation consultancy SNP AG. Harlex is a specialist SAP partner with an extensive track record in managing and delivering successful SAP data migration projects to clients like Sony Music and Henderson Global Investors.

Selected Consulting M&A Deals Announced in September:

ECS acquires UK DevOps consultancy Forest Technologies.
Deal Size: Undisclosed Industry: IT Services Date: September 01, 2016, Target Location: U.K.
Forest Technologies, founded in 2003, is a DevOps consultancy that provides business automation solutions to clients and partners, which includes AWS, Docker, and Automic. According to the firm, it has seen revenues grow five-fold in the last four years.

Sia Partners Announces the Acquisition of Management Consulting Firm Molten Group
Deal Size: Undisclosed Industry: Financial Services Date: September 01, 2016, Target Location: U.S.
By integrating Molten with the London office of Sia Partners, the company increases its critical size in the UK middle market, with close to 60 consultants in four practices and £9m ($12m) in combined revenue. In North America, Sia Partners will have a fourth office (New York, Charlotte, Montreal and now Houston) and 80 consultants, for revenues totalling £13m ($17m).

Marsh & McLennan Acquires Atlanta-Based Benefits Advisory Group
Deal Size: Undisclosed Industry: Human Resources Date: September 01, 2016, Target Location: U.S.
Created in 2003, Benefits Advisory Group offers employee benefit services to midsize employers throughout Georgia. All of the firm’s employees, including its owner Al NeSmith, will join MMA and operate as part of MMA’s existing Atlanta operations.

Navigant Acquires Dymedex Consulting
Size: Undisclosed Industry: Healthcare Date: September 01, 2016, Target Location: U.S
The addition of the experienced Dymedex team, as well as the firm’s proprietary market development tools and methodologies, expands Navigant’s capabilities in the medical technology and life sciences industries. Navigant also plans to make the Dymedex tools, methodologies and expertise available to its healthcare clients.

Deal Size: Undisclosed Industry: Data Analytics Date: September 06, 2016, Target Location: U.S.
EXL, a leading Operations Management and Analytics company, announced that it has acquired IQR Consulting Inc.,  a U.S.-based provider of marketing and risk analytics solutions for the banking industry. With a global delivery model and marquee clients across the United States, IQR will help EXL accelerate its analytics growth in the banking and financial services industry.

W2O Group Acquires Pure Communications
Deal Size: Undisclosed Industry: Healthcare Date: September 07, 2016, Target Location: U.S.
W2O Group, a network of complementary, digitally oriented, analytics-directed communications and marketing firms, announced the acquisition of Pure Communications, LLC, a leading strategic communications consultancy focused in the healthcare industry.

Certara Acquires d3 Medicine
Deal Size: Undisclosed Industry: Healthcare Date: September 07, 2016, Target Location: U.S.
Certara®, the leading provider of decision support technology and consulting services for optimizing drug development and improving health outcomes, announced that it has acquired d3 Medicine. d3 Medicine, which is based in Parsippany, NJ and Melbourne, Australia, provides strategic planning and stewardship of complex drug development programs.

Dentsu Aegis Network acquires respected Brazilian consulting firm Cosin Consulting
Deal Size: Undisclosed Industry: Digital Media Date: September 09, 2016, Target Location: U.S.
Dentsu Aegis Network today announces the acquisition of leading Brazilian consulting firm Cosin & Associados Consultoria e Serviços de Informática S.A (“Cosin Consulting”). Known as “Cosin – Linked by Isobar,” the firm will become part of the Isobar Brazil Group, aligning closely with its global ambition to help clients transform their businesses through brand commerce and the creative use of digital and technology.

Options Group Announces Its Acquisition of Broadstreet Global
Deal Size: Undisclosed Industry: Financial Services Date: September 12, 2016, Target Location: Australia
Options Group, a leading global executive search and strategic consulting firm, announces its acquisition of Broadstreet Global, a financial services search and strategic consulting firm based in Sydney, Australia.  Broadstreet Global specializes in search and consulting for investment banking, capital markets, structured products, alternative asset classes and insurance. 

Accenture Announces Intention to Acquire OCTO Technology
Deal Size: c.$129m (Implied EV) Industry: IT Consulting Date: September 15, 2016, Target Location: France
Accenture (NYSE: ACN) has agreed to purchase a 47.4 percent shareholding in OCTO Technology, a technology consultancy specializing in digital transformation and software development, with the intention to acquire the remaining shares.

Accenture to acquire consulting firm Kurt Salmon
Deal Size: c.$165m Industry: IT Consulting Date: September 22, 2016, Target Location: U.S.
Accenture, a global professional services company, has entered into an agreement to acquire Kurt Salmon, a global strategy consulting firm focused on the retail industry. The acquisition will expand Accenture Strategy’s capabilities in delivering strategy consulting services to retailers and private equity firms in a world disrupted by digital.

Accenture to acquire Workday consulting firm DayNine
Deal Size: Undisclosed Industry: Professional Services Date: September 26, 2016, Target Location: U.S.
The systems integration and outsourcing giant says it plans to use DayNine to become “become the largest certified workforce in the Workday ecosystem.” DayNine currently has around 400 employees with 1,250 Workday certifications.

Envision acquires Crown Web, formerly known as Embolden
Deal Size: Undisclosed Industry: Digital Consulting Date: September 27, 2016, Target Location: U.S.
This acquisition significantly increases Envision’s existing website design and online communications services through their newly created Digital Innovation & Design division. This division will be led by former Embolden employee Megan Knobbe with Nick Merrill serving as the company’s Creative Director.

BCG acquires procurement and operations consultancy Inverto
Deal Size: Undisclosed Industry: Management Consulting Date: September 28, 2016, Target Location: Germany.
The Boston Consulting Group (BCG) continues to expand its presence in the procurement and operations segment by taking over Inverto AG, a management consulting firm specializing in procurement and supply chain management. By acquiring the Cologne-based company, BCG further diversifies its range of services for clients in this segment.

NTT Data to acquire Nefos
Deal Size: Undisclosed Industry: IT Services Date: September 28, 2016, Target Location: Switzerland
IT services provider NTT Data EMEA has agreed to acquire Nefos, a Salesforce consulting company. Nefos specializes in delivering tailor-made Salesforce services to German-speaking markets via its offices in Germany, Austria and Switzerland, as well as through its near-shore cloud development centre in Croatia.–1164426

IBM to Acquire Promontory
Deal Size: Undisclosed Industry: Financial Consulting Date: September 29, 2016, Target Location: U.S.
In recent years, IBM has been known for its forays into artificial intelligence and cloud computing. Now, the technology provider is moving deeper into financial consulting with the acquisition of a prominent — and at times controversial — Washington firm.

ÅF acquires Solid Engineering AS
Deal Size: Undisclosed Industry: Engineering Consulting Date: September 30, 2016, Target Location: Norway
Solid Engineering AS was founded in 2002 and provides strategy and engineering consulting services for the Norwegian energy market. The company’s core expertise includes project management, construction management and quality and safety assurance of high-voltage power lines. Its largest client is Statnett SF.

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