What do M&A opportunities in Asia-Pacific look like?

Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia-Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia-Pacific region.

This is the second part of their discussion: How do the differences between regional APAC markets impact M&A activities in the B2B services sector?

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There are essentially five sub-regions in APAC, each of them with specific characteristics:

  • China, Hong Kong, Taiwan

China is a huge economy, but the services sector is still at a relatively early stage. There aren’t many home-grown companies developed by local entrepreneurs that have reached ‘international investor-grade’. In recent years, however, several large Chinese companies have shown an interest in acquisitions in the region and beyond, with a view to reducing their dependency on their domestic market and gaining international credibility. Hong Kong stands out in this regard, because it’s a vibrant market with established global consultancies.

As an example for China, BlueFocus has managed, through an aggressive acquisition strategy, to boost the topline growth of its digital business, which has accounted for 73% of total group revenue in  2016, doubling the proportion recorded in 2015.

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Private Equity firms demonstrate strong demand for consulting businesses

Eight mistakes when building a sale-ready business

By Alex White, Managing Director, Head of M&A and Strategic Advisory  Europe, and Ramone Param, Associate Director, Market Intelligence & Buyer Coverage.

Private equity (PE) providers are enthusiastic investors in knowledge intensive business services.  Last year was marked by some headline grabbing exits and new investments by the largest global buyout firms and this had a re-affirming effect on PE’s keen interest in this space.  These included KKR’s acquisition of Optiv Security from Blackstone, as well as the sales of AlixPartners by CVC and the divestment of Carlyle’s remaining stake in Booz Allen Hamilton.

Our own experience of achieving many great outcomes for clients who secured PE investment in 2016, and the line of investors queuing at our door for deal flow, bodes well for owners in 2017.

Sustaining growth in successful businesses – an owners challenge

A challenge for many owners of valuable businesses is the changing attitude to risk that creeps up as success is achieved. It’s natural for sentiment to shift from value creation to value preservation. While natural, it’s also a sure sign that owners’ personal financial portfolios are out of balance and a warning that excess cautiousness will be sub-optimal for their business in the longer term.

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Should I sell my consulting firm to an overseas buyer?

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By Gabriela Silvestris, Director, Equiteq

Overseas buyers can be an important target audience when looking to sell your consulting firm. Equiteq considers international acquirers for every M&A client and a large proportion of the businesses we have sold have been bought by overseas buyers.

Acquiring in desirable regions allows strategic buyers to gain quick access to lucrative markets, brands, intellectual property, local market knowledge, new clients and specific local expertise. As a result of this, overseas buyers may pay a premium to gain a market foothold.

To attract overseas buyers, it is important to demonstrate the attractiveness of local markets, market positioning and why the acquisition will be less risky and deliver a faster return than opening an office and recruiting local talent. To learn more about global buyer demands download our latest Buyers Research Report here.

M&A transactions need careful handling and cross-border M&A deals bring an array of additional challenges.

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January 2017: Consulting Market Update

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

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By Ramone Param, Associate Director, Market Intelligence & Buyer Coverage, Equiteq.

The New Year commenced with some notable deal activity and M&A news across all five of the consulting segments that we track. The share prices of many listed consultants that form part of our Equiteq Consulting Share Price Index also rose on the back of strong market sentiment and earnings announcements.

WS Atkins and CH2M $4bn merger talks

The Times reported that British engineering and design consulting firm, WS Atkins Plc (ATKW.L) and US-based CH2M are in merger talks. Atkins had said last year that plans by the new U.S. administration and U.K. government to increase infrastructure spending would benefit the company. Atkins had been using M&A to selectively increase its geographic footprint and capabilities, in a segment that is considered to be consolidating as players look to reduce overheads and increase global market share.

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Global interest in the Asia-Pacific service sector is set to drive a new wave of M&A activity

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Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia Pacific region.

This is the first part of their discussion: What are the challenges and opportunities for the B2B services sector in Asia-Pacific over the coming years?

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The B2B services sector in Asia-Pacific (APAC) is not as developed as its counterparts in North America or Europe mainly because the primary and secondary sectors still remain the main engines of economic growth in the APAC region. As these sectors reach maturity, the services sector will follow suit in the years to come.

Another major challenge for B2B consulting firms in the APAC region was the relatively low appreciation for services in most Asian business cultures. This is mostly the result of the region’s greater emphasis on tangible, physical items that can be traded.

Also labour costs are generally lower in APAC than in Europe or North America – with notable exceptions in Japan, Australia, New Zealand, Singapore and Hong Kong – meaning companies tend to be less pressured to increase productivity by improving their business processes.

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Equiteq advises McKinney Rogers on its sale to GP Strategies Corporation

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Equiteq is pleased to announce that it has advised McKinney Rogers, a results-driven global consultancy, on the sale of its business to GP Strategies Corporation (NYSE: GPX), a Maryland-based performance improvement solutions provider. Equiteq acted as exclusive financial advisor to McKinney Rogers.

Debbie Ung, GP Strategies’ Executive Vice President, stated, “The acquisition of McKinney Rogers will further equip GP Strategies with the essential resources our customers require to successfully execute business strategies and provide greater transparency and visibility into their business outcomes at the C-suite level. We believe that McKinney Rogers’ expertise will bring a synergistic value to our Global 500 customers.”

Damian McKinney, CEO and Founder of McKinney Rogers, said “I am extremely grateful to Equiteq for their hard work, support and tenacity throughout this process. Their consulting industry expertise and advocacy skills helped us to position our business for a successful transaction and I would recommend them unreservedly to any consultancy business owner considering a sale.”

Adam Tindall, Director in Equiteq’s New York office, commented, “McKinney Rogers is a world-class consultancy with an impressive track record of embedding their business operating system into global organizations to help C-suite executives achieve exceptional, sustainable corporate performance. The strategic and synergistic fit between McKinney Rogers and GP Strategies was immediately apparent. I wish both parties a successful future together.”

To see the full press release, please click here.

To see all our deals, please click here.

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Training isn’t just for athletes

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This week we have a guest blog from Patrick Chapman, Business Development Partner at Elevation Learning.

Everyone agrees that most of the value of a professional consulting firm comes from the people within the organization. In fact, staff in a consulting business are so important that ‘consultant loyalty’ is one of Equiteq’s 8 levers of equity value. So if you want to grow your firm with a view to selling it one day, then nurturing and developing your staff has to be one of your priorities. Unfortunately, when looking to improve financials prior to sale, training is one of the first budgets to be cut. However, this strategy is undertaken at your peril and will end up doing more harm than good.

To build value, your staff team needs to have a shared language and consistent ways of working. This will allow different groups of consultants to come together quickly to form a cohesive unit for each client engagement, meaning truly chargeable work starts more quickly. This ultimately protects your margins and when the value of the whole exceeds the sum of its parts, your bottom line performance will benefit, meaning you’ll be more appealing to buyers.

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