August 2018: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals profiled include Wunderman’s acquisition of Gorilla Group, Omnicom’s acquisition of Credera and Accenture’s acquisitions of Mindtribe & Pillar.
  • Equiteq advised DBM Consultants on its merger with Illuminera.
  • The Equiteq Knowledge Economy Share Price Index rose over the month led by share price rises in various listed management consulting and IT services.

Wunderman acquires Gorilla and WPP announces Mark Read as its new CEO

Target: Gorilla Group is a 370-person global digital agency specializing in eCommerce consulting. In FY2017 the agency generated $40m of revenue.

Buyer: Wunderman is a digital agency that is part of WPP, one of the leading global networks of advertising agencies.

Deal Insight:  Gorilla Group will become part of Wunderman Commerce. The acquisition deepens Wunderman Commerce’s eCommerce capabilities in North America. The buyer will also benefit from Gorilla’s strong relationships with key technology partners including SAP Hybris, Salesforce and Magento.

At the end of the month, it was announced in the Financial Times that Mark Read will be named as the new CEO of WPP, succeeding Sir Martin Sorrell. There was a lot of speculation on internal and external candidates that may be chosen as WPP’s new leader. Mark Read had previously held leadership positions at WPP Digital and Wunderman respectively. Read is expected to undertake a strategic review of the business as it faces a range of fresh challenges.

Omnicom builds its management and technology consulting capabilities with acquisition of Credera

Target: Credera is a US-based management and technology consulting firm with c.300 professionals. The business is focused on consulting around mar-tech and ecommerce platforms.

Buyer: Omnicom is one of the leading global networks of advertising agencies.

Deal Insight: The acquisition of Credera forms part of three reported acquisitions made by Omnicom in 2018. This recent deal flow follows a lull in activity in 2017 and 2016. A potential driver for the recent uptick in activity from the buyer is the recent fluctuations in its share price performance, as many of the leading marcoms experience a range of industry headwinds.

These headwinds include declining digital media spend among some large clients, the threat of clients working directly with platforms like Amazon, and new competition from acquisitive IT and consulting firms. The likes of Accenture Interactive and Deloitte Digital have expanded successfully into the digital media space via a string of acquisitions. Credera is positioned at the intersection of management consulting and technology services, which builds Omnicom’s adjacent capabilities in response to these competitive shifts.

Accenture expands Industry X.O capabilities with acquisitions of Pillar Technology and Mindtribe

Targets: Pillar Technology is a US-based 320-person smart embedded software solutions business. Mindtribe is a 40-person US-based hardware engineering firm.

Buyer: Accenture is a leading global technology services firm.

Deal Insight: The deals enhance Accenture’s Industry X.O service line, which helps clients create the next generation of smart, connected devices. Connected devices are developing rapidly with advances in artificial intelligence. They offer businesses significant competitive advantages by creating new revenue opportunities and business efficiencies. Pillar Technology CEO Bob Myers will lead Accenture Industry X.0’s smart products & embedded solutions practice. The deal follows a number of digital consulting deals by Accenture in North America, including its acquisition of IoT consulting business Altitude last year.

Selected Knowledge Economy M&A announced in August:

Equiteq Knowledge Economy Share Price Index:

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