Lift & Shift: following the rise to cloud migration

For every consultant who spotted the cloud opportunity and raced to embrace it, there will be another who is still not quite fully convinced.

Clients have spent hundreds of thousands – or even millions – on their on-premise solutions, they are comfortable with their data centres and have established long-term relationships with their maintenance engineers. They’re not ready to give all that up in one go. And, as long they resist a wholesale move to cloud, there’s a role for IT consultants and specialists to offer support for these traditional models.

But the pace of change is quickening; clients have tuned in to piecemeal migration and with software vendor innovation being cloud-focused, the largest traditional consulting firms have seen the writing on the wall, turning to mergers and acquisitions (M&A) as the only credible way of rapidly building their cloud capability.

Shaun Fröhlich is UK managing partner of Incredibleresults, and works with leadership teams to accelerate value growth.

“We are all on a spectrum,” he says. “Many believe the world is changing because of the cloud and it is spurring them on to cash in their chips on their existing business, but there is an almost equal number that remain neutral and see it as an evolution, not reason to trigger a capital event.”

Despite the cloud offering faster, less disruptive deployment and easier global enablement – while cyber-security concerns have increasingly been addressed – migration to the cloud isn’t yet wholesale for most organizations.

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The Australian M&A market outlook

A recent report from Source Global Research suggests Australia has overtaken the US and UK as the second most attractive consulting market in the world – only behind the DACH market (Germany, Austria and Switzerland).

International firms see the Australian economy as a resilient market – which is perhaps no surprise given it’s enjoyed 25 years of consecutive growth – and a strategic outpost to further their goals in Asia. According to the report, the use of consulting services and advisors in the country is now at a level that will garner considerable interests from international businesses and, we believe, act as a catalyst for a significant increase in M&A activity in the coming months.

What’s driving demand for professional services consultants?

The professional services (PS) sector is an important contributor to the Australian economy, employing more than 2.2 million people. Growth in the industry has been driven by demand from complex businesses, which rely on consultants to introduce new innovative processes to improve their products or services and simplify the way they operate.

This trend is reflected in the increased demand for the output of highly skilled labor, the growing use of outsourcing, and a range of technological advancements.

In the last decade or so, Australia has seen sectors such as financial services (FS), mining and engineering grow exponentially, which has driven demand for specialist skills and personnel, creating a high-value and service-based economy.

Geoff Stalley, Partner at Deloitte Australia, said: “Consultants and advisors are in huge demand in Australia at the moment. For instance, the energy and mining sector are increasingly relying on expert consultants to help them build more efficient models and operational technologies to manage risks and significant operating costs.”

And, as technological developments continue to increase the need for a skilled workforce, we can expect fixed wage levels to remain high, attracting even more consultants.

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5 things every consulting firm must know to thrive in Asia-Pacific

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 third part of their discussion: What advice would you give to consulting firm owners in one of the Asia-Pacific countries?

The consultancy landscape in Asia-Pacific has changed in the last few years. There has been a strong development in the use of consultants as the regional economies have grown and become less dependent on the primary sector, and have seen a surge in secondary and services sectors activities.

A 2016 report from the United Nations Economic and Social Commission for Asia and the Pacific shows the increased activity in the services sector is partly down to its role in facilitating global value chains in the manufacturing sector. It also attributes this to the growth of digital-intensive services in sectors like financial services, telecommunications and digital media and marketing.

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February 2017: Consulting M&A Update

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

Blackstone acquires Aon’s human resources outsourcing business

The Blackstone Group agreed to pay up to $4.8bn to acquire Aon’s human resources outsourcing business. The Aon unit processes work benefits for 15% of the US population and is a provider for cloud-based human resources management systems. Blackstone is believed to have prevailed over buyout firm Clayton Dubilier & Rice in an auction for the business.

Aon acquired the business in 2010 as part of its $4.9bn acquisition of Hewitt Associates. The transaction with Blackstone is expected to enable Aon to focus on growth areas like cybersecurity and health insurance, while using part of the proceeds to buy back shares.

The deal will be structured whereby Aon receives $4.3bn in cash, plus up to another $500m in earn-out.

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