- Global deal activity fell 1% on prior quarter
- Strong growth in M&A in North America and APAC
- Management consulting sees strongest performance
- Robust demand for healthcare consulting capabilities
- Equiteq Share Price Index continues to rise
By Ramone Param, Associate Director, Equiteq
The final quarter of 2017 saw global deal activity in the consulting sector fall by 4% year-on-year and decline 1% as compared to the third quarter. As frequently observed, there were significant variations in deal activity by region and amongst market segments. There is strong buyer appetite for deals as we commence 2018.
Strong rise in management consulting M&A activity
Overall, deal volume growth for the management consulting segment was up 58% year-on-year. An ongoing theme in this segment is deal flow across adjacent industries, one example of this being PwC’s acquisition of Salesforce consultancy cDecisions in November.
The same month also brought the quarter’s major private equity buyout as Permira acquired Duff & Phelps, a leading provider of valuation and corporate finance advisory services. Private equity activity remained robust across segments through the quarter.
Noteworthy deals across all segments
Xafinity’s acquisition of Punter Southall’s actuarial, pensions administration and investment consulting businesses was notable as the deal is set to be the first major acquisition in the investment advisory industry since the Financial Conduct Authority (FCA) referred the industry to the UK’s competition regulator.
The FCA referral is expected to result in new rules that distribute clients of the big three, Aon, Mercer and Willis Towers Watson, while driving consolidation amongst smaller advisers. The competition regulator’s investigation is expected to complete in early 2019.
Assystem’s acquisition of The Biotech Quality Group, a specialist in performance management and improving regulatory compliance in Europe’s life sciences industry, stood out amongst declining flows within the engineering sector.
Further interest in acquiring healthcare related businesses was seen when Atos announced the acquisition of three healthcare IT consulting firms in the U.S. This is a region to expect further healthcare deal activity as the industry reacts to regulatory shifts and technological disruptions. As it stood last quarter, c.10% of all deals involved consulting firms with a focus on serving clients in the healthcare sector.
Equiteq Consulting Share Price Index continues to rise
After reaching new highs in the previous quarter, the Equiteq Consulting Share Price Index rose c.3% in Q4. The support stems from strong investor confidence in the sector coupled with a continuously improving economic outlook. The management consulting index was the standout performer, +10.3%, followed by the IT consulting index which rose 4.3%.
As the new year starts there is ongoing appetite for M&A. We are receiving substantial demand for strategic advice from owners that have received recent unsolicited interest in their consulting firms and want to benchmark this against buyer demand from the broader market in the new year.
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