Data Analytics Consulting Global M&A Review 2019

By Ramone Param, Director, Equiteq

We have released a summary of our detailed review of data analytics consulting M&A and investor trends for owners of businesses across the knowledge economy.

At the core of the Fourth Industrial Revolution is the fusion of big data, advanced analytics and new physical technologies. The key to business success in the new digital age is no longer being able to simply use data to measure current and past performance. It is being able to make predictions about the future and quickly prescribe recommended strategies that can enrich decision making.

From a delivery model perspective, there is pressure on knowledge-intensive services firms to enhance their consulting offering with new data analytics solutions. This same pressure is being felt by consulting firms’ clients, who look to their advisers for assistance in innovating and realizing competitive advantages from new data analytics tools. Across the space in 2018, we found that buyers focused on acquisition targets with proprietary platforms, leverageable IP and managed services solutions.

Equiteq Data Analytics Consulting Share Price Index and annual M&A deal volumes for 2009 to 2018

In 2018, there were 226 deals completed across the data analytics consulting space globally. These volumes had dipped as compared with 2017, but are well above long-term averages. Most deals occurred in North America and Europe, but a large proportion of M&A is cross-border in nature, much of which involves cash-rich buyers from the Asia-Pacific. Average reported revenue valuation multiples in the space are at a significant premium to those occurring in the broader knowledge economy.

There continues to be strong demand for advanced data analytics investments across cash-rich private equity firms. These financial buyers observe the strong potential for growth and investment returns in the space. This was recently exemplified by Apax Partners’ $200m minority investment in Fractal Analytics at the beginning of 2019.

Consolidation in the services space is also matched by notable deals in the analytics software industry. SAP’s acquisition of Qualtrics, Salesforce acquisitions of Mulesoft and Datorama, and Cloudera’s acquisition of Hortonworks were notable consolidations of software players.

Despite some volatility through the second half of the year, the Equiteq Data Analytics Consulting Share Price Index achieved overall rises. The index was impacted by investor uncertainty that is affecting the broader global equity markets. The Equiteq Data Analytics Consulting Share Price Index ended the year touching new all-time highs and is now at a c.50% premium to its ten-year average.

The market outlook remains robust as buyers continue to demonstrate strong interest in new acquisition opportunities. In 2019 we will continue to monitor the impact of accelerating AI and ML developments on the industry. Furthermore, we are interested to see how analytics solutions evolve with the increasing adoption of immersive and blockchain technologies.

If you would like to receive a full copy of the report and discuss your current strategic objectives as a business owner or acquisition strategy as an acquirer, please get in touch.

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