October 2016: Consulting Market Update

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By Ramone Param, Buyer Coverage Associate, Equiteq.

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

As we anticipated in our third quarter update, significant deal activity is continuing to occur in the IT services segment, with a number of notable transactions in the sector being announced this month. This comes as the broader M&A market has observed a wave of mega deals across sectors, with October being reported as one of the busiest months for deal activity in the US, according to data from Dealogic.

In the month, the share prices of many listed consulting players contained within the Equiteq Consulting Share Price Index were impacted by quarterly earnings announcements, the release of macroeconomic data and US Presidential election uncertainty. The share price of WPP, a constituent of the Equiteq Media Share Price Index, was boosted by stronger than expected third quarter earnings. These results were in contrast to weaker quarterly earnings from some of its peers like Publicis. This variation in results amongst large listed media players has led some equity analysts to attribute these differences to rising competition for key client accounts as the evolution of digital media continues to disrupt the industry.

There were three notable deals announced this month within the IT Services segment:

  • In our recent article analyzing trends within Cloud Consulting M&A, we discussed the landmark acquisition of Appirio by leading Indian IT-Services player, Wipro, for $500m. Appirio will position Wipro as the leading Indian technology services player in the cloud services space.
  • The Blackstone Group sold Chinese IT outsourcing and consulting firm, Pactera, to a unit of Chinese shipping and air giant HNA Group. This deal reportedly values the business at c.$930m and returns Blackstone c.1.5 times on its initial investment of over $600m that it made in March 2014.
  • Aon agreed to acquire a 550-person US-based cyber-security specialist called Stroz Friedberg. The deal was seen as a move within the insurance industry to capitalize on the risk management opportunities from rising client concerns over cyber threats.

Selected Consulting M&A Deals Announced in October:

NCC buys US provider of cyber security, Payment Software Company
Deal Size: $18.75m Industry: Cyber Security Date: October 03, 2016, Target Location: U.S.
The Manchester based global cyber security and risk mitigation expert group NCC Group has acquired the US based Payment Software Company for a maximum consideration of $18.75m in cash. PSC is a leading provider of cyber security, payment and compliance-related consulting services to the global payments industry as well as the financial and retail sectors.
http://www.datacentres.com/dc-news/ncc-buys-us-provider-cyber-security

Avaap Acquires Falcon Consulting
Deal Size: Undisclosed Industry: Healthcare Consulting Date: October 04, 2016, Target Location: U.S.
Avaap, the largest Infor systems integrator, announced it has acquired Falcon Consulting, LLC, a KLAS-leading Epic Systems implementation and optimization firm. With this acquisition, Avaap has put itself in the distinctive position of servicing the largest enterprise software needs for its healthcare customers.
http://markets.ibtimes.com/ibtimes/news/read?GUID=32968484

Jones Lang LaSalle acquires compliance technology firm, ATG Technology
Deal Size: Undisclosed Industry: Compliance Services Date: October 05, 2016, Target Location: U.S.
Chicago-based real estate management firm Jones Lang LaSalle has acquired a 90-person consulting firm that uses technology to help healthcare facilities comply with building regulations.
http://www.modernhealthcare.com/article/20161005/NEWS/161009962/jll-acquires-compliance-technology-firm

Nomura Research Institute (NRI) acquires Australian firm ASG Group
Deal Size: $35m Industry: IT Consulting Date: October 06, 2016, Target Location: Australia
Nomura Research Institute, Ltd., (NRI), a leading provider of consulting services and system solutions is pleased to announce it has entered a definitive agreement to acquire Australian company ASG Group Limited, a leader in cloud based delivery of IT business solutions in Australia.
http://www.bobsguide.com/guide/news/2016/Oct/6/nomura-research-institute-nri-acquires-australian-firm-asg-group/

Aon to acquire cyber-security firm Stroz Friedberg
Deal Size: Undisclosed, Industry: IT Consulting, Date: October 11, 2016, Target Location: U.S.
Aon, one of the world’s largest insurance brokers, will acquire Stroz Friedberg, the cybersecurity firm that worked with Yahoo, Sony and others after they were hacked. The Chicago-founded insurance giant and the New York-based security firm together would assess clients’ risk and sell them tools to protect against attacks, as well as insurance in case an attack does occur.
http://www.chicagotribune.com/bluesky/originals/ct-aon-acquires-cybersecurity-firm-stroz-friedberg-bsi-20161011-story.html

HNA Group acquired majority stake in IT Consulting and Outsourcing firm, Pactera from The Blackstone Group. Deal Size: c.$675m (c.$930m EV) Industry: IT Services Date: October 12, 2016, Target Location: China
Private-equity firm Blackstone Group LP has agreed to sell one of its largest assets in China to a unit of Chinese shipping-and-airline giant HNA Group for about $675 million in cash, according to people familiar with the situation. http://www.wsj.com/articles/blackstone-to-sell-it-outsourcing-firm-in-china-for-675-million-1475652110

Kier sells Mouchel Consulting to WSP
Deal Size: Undisclosed Industry: Digital Media Date: October 12, 2016, Target Location: U.K.
Mouchel Consulting has approximately 2,000 employees, mostly in offices across the UK and Ireland, as well as a presence in the Middle East. For the financial year ended 30th June 2016, Mouchel Consulting reported revenue of £125m, generating an operating profit contribution of £8m and a profit before tax of £5m.
http://www.theconstructionindex.co.uk/news/view/kier-sells-mouchel-consulting-to-wsp

CCI Group Inc. and McIntosh Perry Consulting Engineers announce merger
Deal Size: Undisclosed Industry: Engineering Date: October 13, 2016, Target Location: Canada
CCI Group Inc. (CCIG), a national team of building science and environmental engineering experts, and McIntosh Perry Consulting Engineers Ltd. (MPCE), a multi-disciplinary engineering firm based in Eastern Ontario, announced the merger of the two companies Oct. 5
http://dailycommercialnews.com/Economic/News/2016/10/CCI-Group-Inc-and-McIntosh-Perry-Consulting-Engineers-announce-merger-1019149W/

Perficient acquires Atlanta digital consultancy Bluetube
Deal Size: Undisclosed Industry: IT Consulting Date: October 13, 2016, Target Location: U.S.
Information technology and management consulting firm Perficient has acquired Bluetube, a digital consultancy agency based in Atlanta. Bluetube has $7 million in annual revenue and its customers include Home Depot, Kimberly-Clark and the New York Philharmonic.
http://www.stltoday.com/business/local/perficient-acquires-atlanta-digital-consultancy-bluetube/article_2a8db4a9-d4fc-55df-aded-9788ed7d4882.html

Digital marketing consultancy SPAG acquires Giga Health
Deal Size: Undisclosed Industry: IT Consulting Date: October 18, 2016, Target Location: India
SPAG, an award-winning, specialised public relations, public affairs and digital marketing consultancy, announced the acquisition of Giga Health, a healthcare-focused digital marketing and social media agency. The brand will continue to operate as Giga Health under the aegis of the SPAG group.
http://www.bestmediainfo.com/2016/10/digital-marketing-consultancy-spag-acquires-giga-health/

Accenture Buys Allen International
Deal Size: Undisclosed Industry: IT Consulting Date: October 20, 2016, Target Location: U.K.
Channel giant Accenture has acquired London-based consultancy Allen International to help its banking clients reinvent their physical branches with new digital networks and digital capabilities.
http://www.crn.com/news/channel-programs/300082477/accenture-buys-international-consultancy-to-help-banks-build-digital-capabilities.htm

Wipro acquired US-based consultancy firm Appirio
Deal Size: $500m Industry: Professional Services Date: October 21, 2016, Target Location: U.S.
Wipro has acquired US-based consultancy firm Appirio, a services firm with a large offshore firm that helps corporates implement cloud applications such as SalesForce.
http://www.indiainfoline.com/article/news-top-story/wipro-acquired-us-based-consultancy-firm-appirio-and-top-corporate-news-of-the-day-116102100211_1.html

NV5 Acquires JBA Consulting Engineers
Deal Size: Undisclosed Industry: Engineering Date: October 25, 2016, Target Location: U.S.
NV5, a provider of professional and technical engineering and consulting solutions, announced that it has acquired JBA Consulting Engineers, Inc. (“JBA”), a Las Vegas, Nevada-based MEP engineering, acoustics, technology, and fire protection consulting firm with approximately $33 million in annual revenue.
http://ir.nv5.com/phoenix.zhtml?c=251703&p=irol-newsArticle&ID=2216163

Amadeus Consulting merges with Exadel
Deal Size: Undisclosed Industry: IT Consulting Date: October 26, 2016, Target Location: U.S.
Boulder-based Amadeus Consulting has merged with another software engineering firm, San Francisco’s Exadel. Amadeus employs 75 people and plans to hire 10 additional staff in coming months. Exadel has around 1,000 employees nationwide.
http://www.dailycamera.com/boulder-business/ci_30507373/boulders-amadeus-consulting-merges-san-francisco-firm-exadel

EXL acquired Datasource Consulting
Deal Size: Undisclosed Industry: Management Consulting Date: October 27, 2016, Target Location: U.S
EXL, a leading Operations Management and Analytics company, announced that it has acquired Datasource Consulting, LLC, an 80-person, Denver-based company specializing in Enterprise Data Management and Business Intelligence. http://www.exlservice.com/exl-deepens-investment-analytics-acquiring-data-management-company-datasource-consulting/

Important Notice: This article has been compiled using our daily activities in the industry that provide us with unique market intelligence, along with various third party information sources.

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