Equiteq reviewed M&A and investment trends in the growing sales performance and enablement industry.
Digital transformation initiatives continue to be an overarching theme with large enterprises looking to leverage data and technology to drive consumer engagement and sales. Sales performance and enablement sits at the intersection of training, management consulting and sales effectiveness. This mission critical function increasingly matters to overall business strategy and outcomes.
Clients are changing how they engage with sales improvement systems and how they spend related budgets. Equiteq expects these trends to continue with training organizations pursuing M&A as a means to ensure they have the necessary digital and data analytic capabilities to revitalize growth and support their client needs. While on the face of it, increased competition for deals should facilitate sales processes and more lucrative outcomes, preparation and timing remain critical.
Percentage of Companies with Dedicated Sales Enablement
Growing needs for sales performance & enablement advisory services
The sales performance and enablement function has become increasingly important to organizations. This has been highlighted by a significant uptick in the number of companies with a dedicated sales enablement team. Advisory firms with niche and value-added capabilities can capture a share of the increased spend of a growing set of sales performance improvement organizations focusing on key effectiveness objectives around sales content, sales training and sales coaching. Sales performance and enablement has become progressively automated, therefore driving margins for service providers and positive results for their clients. These trends have in turn driven M&A in the space, as larger players are acquiring companies with tech-enabled offerings in the space.
Buyers target specific capabilities when pursuing M&A
Equiteq has significant relevant transaction experience and regular discussions with strategic buyers and investors in the space. There are select themes that are consistently attractive to buyers, which are also pervasive across the industry.
- “Digital” is a key buzzword in the human resources and management consulting M&A world as buyers look to move up the value chain by adding in automated, tech-enabled services.
- Productized solutions create leverage and drive margins within organizations and are more easily scaled by a buyer.
- Deep sector expertise highlights differentiation of an offering beyond its technical ability and highlights.
- Certain buyers are looking for acquisitions that “move the needle” and justify the opportunity cost of other targets.
- Buyers, especially financial sponsors, are interested in businesses that have a portion of their revenue coming from offerings that are recurring in nature.
- Significant revenues coming from one or a small group of clients can be perceived as a risk factor for some buyers.
- Blue-chip clients and access to significant consulting spend within them are a value driver, especially when they can unlock latent value within a buyer’s organization.
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