How to handle an approach from a buyer – ‘Bid-defence’

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By Bruce Ramsay, Managing Director, Business Development, Equiteq

It is quite common for successful consulting firms to be approached by prospective buyers. In fact, our data suggests that a third of the deals we process come about from buyers approaching the client.

During a recent webinar, Equiteq Managing Director Bruce Ramsay answered questions from attendees on the subject of how to handle an approach from a buyer and what to do to maximize the opportunity from such an approach.

1. Will my business be worth more if a buyer approaches me, instead of going to market?

Your business could potentially be worth more if a buyer approaches you, as an incoming enquiry is an indication of proactive interest.

However, it is important to gauge the credibility of an unsolicited approach as soon as possible, as many are just ‘kicking the tyres’ and seeing if they can acquire an asset at a knock-down price. Understanding the buyer’s intention early on will help you understand whether this is an endeavor worth following up with or not.

Here’s what to expect from consulting firm buyers.

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Thinking about expanding internationally? Four common misconceptions every business owner should know the truth about

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By Adam Blatchford, Associate, Equiteq

For many business owners, establishing a strong local presence is only the first step on their road to success. Once they’ve achieved this, they want to continue growing the value of their firms, and many are tempted by the thought of expanding geographically beyond their home markets. It is a seductive idea littered with potential pitfalls that could not only jeopardize the business’s financial position but also significantly erode equity value.

In this blog, we look at how you, as a consulting firm owner, can make smart decisions around ‘if’ and ‘how’ to scale your business abroad, to ensure you are protecting and building your company’s value rather than hindering the attractiveness of the company to future buyers.

We’ve compiled some of the most common reasons business owners give for expanding internationally, and the potential risks that those reasons might be hiding.

1. We have exhausted our home market

There is a significant opportunity cost to international expansion; while it can provide opportunities to grow, it is usually far easier to grow in your current market where you already have relationships and credentials. So it should only be attempted if you have truly saturated your market:

  • Be absolutely certain that other factors are not hindering growth

i. Check that your proposition correctly resonates with your client’s issues
ii. Examine if you are competing with internal capacity
iii. Assess your account management to ensure you maximize your current clients
iv. Confirm that your sales focus is on the right type of client

If these issues are the true cause, rather than a saturated domestic market, then they will hinder your progress in the new market too.

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Robust demand for M&A by corporates and private equity, and strong share price performance in the fourth quarter.

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By  Ramone Param, Associate Director – Market Insights & Buyer Coverage, Equiteq

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Global M&A activity across the Knowledge-Intensive Services sector, as tracked by the Equiteq Consulting M&A Index, remained strong in the final quarter of 2016. Deal volumes were broadly flat in comparison to a robust prior quarter and rose in comparison to the same quarter last year. The conclusion of the U.S. presidential race has been followed by sharp rises in investor confidence and the Equiteq Consulting Share Price Index has rallied strongly throughout most of November and December, outperforming both the S&P 500 and FTSE 100. The overall Equiteq Consulting Share Price Index is now rallying at an all-time high.

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As we anticipated, deal activity in the last quarter remained buoyant in the IT services sector. Appirio, was acquired by Wipro for $500m, positioning the buyer as the leading Indian technology services player in the cloud consulting space. Appirio was considered a prized acquisition opportunity amongst a range of potential suitors after a wave of deals left Appirio as one of the largest independent cloud consulting specialists remaining in the market.

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Top 10: What you were reading in 2016

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Welcome back to Equiteq Edge. A new year brings new opportunities for a fresh start. So, as you return to work after an indulgent festive break, we thought we’d provide a quick summary of some of the important things we’ve learnt over the course of 2016 – and that you can apply in the year ahead.

Here’s a list of the most read blogs of 2016.

  1. Sales and profit growth (Part 1): We discussed the importance of revenue and profit, how much marketing you should do and whether an earn out is a given.
  1. Sales and profit growth (Part 2): We covered client concentration, minimum revenue levels and new revenue models in the second part of our sales and profit special.
  1. Does your consultancy have a real value proposition?: Your consultancy’s value proposition is an essential part of its success.
  1. Why equity incentivizing your senior team can improve equity value: Awarding shares (or options) to the right people in the right proportions is one of the most powerful tools at the founding shareholders’ disposal.
  1. Nurturing client relationships to support equity value growth: Client relationships are at the heart of a consultancy’s growth, but they are not all created equal.

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Equiteq advises P2 Consulting on MBO led by Lonsdale Capital Partners

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Equiteq is pleased to announce that it has advised its client P2 Consulting on a management buyout led by the existing management team and supported by Lonsdale Capital Partners. Equiteq acted as exclusive financial advisor to P2 Consulting. The transaction closed on December 23, 2016.

London headquartered P2 provides senior project management support to international blue chip clients that are undertaking significant change initiatives. P2 has grown significantly year-on-year since being established in 2013 and currently generates revenues of around £10m, principally from clients in the financial services and consumer/retail sectors.

With Lonsdale’s investment and wider support, P2 intends to accelerate its growth by expanding into new sectors and geographies, and capitalizing on attractive acquisition opportunities in a fragmented space. P2 is aiming to continue its impressive growth trajectory and realize its ambition to become the world’s leading brand in project and programme management.

Pip Peel, Founder of P2 Consulting, said “Given their consulting sector M&A experience, Equiteq was the natural choice for us when we started to explore options for the business. Equiteq ran a comprehensive process and, guided by them, we concluded that a private equity backed MBO would give the best outcome to shareholders, management and the company going forward. Equiteq introduced Lonsdale and we immediately recognized their experience and the cultural fit would make them the ideal partner.”

To see the full press release, please click here.

To see all our deals, please click here.

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December 2016: Consulting Market Update

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

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By Ramone Param, Market Insights & Buyer Coverage Associate, Equiteq.

2016 ended with a number of high-profile deals being signed across all five of our knowledge-intensive services segments. The share prices of many listed consultants that form part of our Equiteq Consulting Share Price Index also reached record highs. This continued strong investor confidence in the sector is also observed across other industries as reflected by the strong gains of the S&P 500 and Dow Jones, as well as the FTSE 100 which reached an all-time high by year end.

december-update-blog-image-1The largest deal to be announced in December was KKR & Co.’s acquisition of cyber-security specialist, Optiv Security, from The Blackstone Group. The deal followed Blackstone’s filing for an initial public offering of Optiv last month. The sale of the business follows a number of recent high-profile and lucrative private equity exits of portfolio companies operating in the consulting sector, including the sale of Pactera by Blackstone and the sale of AlixPartners by CVC Capital Partners. We expect that these successful landmark sales will support strong appetite from financial buyers investing in the sector in the New Year.

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