November 2017: Consulting M&A and Equity Market Update

By Ramone Param, Associate Director, Equiteq

  • There was notable deal activity across the knowledge-led services industry.
  • Major deals included Permira’s investment in Duff & Phelps, Navigant’s acquisition of Quorum, PwC’s acquisition of cDecisions and RGP’s acquisition of Accretive Solutions.
  • Equiteq was pleased to advise Livingbridge Australia on their acquisition of TSA Management.
  • The Equiteq Consulting Share Price Index fell by c.1% over the month led by declines in the Engineering Services segment.

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Demand for acquisitions set to grow in 2018

Our fourth annual global survey of buyers of consulting businesses delivers current, actionable intelligence in the five segments Equiteq specializes in: Management consulting, IT consulting, Media & Marketing, Engineering consulting and HR consulting. Findings, published today, reveal:

  • Buyers expect to initiate 50% more acquisitions year-on-year
  • Convergence continues to be a key trend as buyers look to diversify
  • 55% of buyers think targets could be better at communicating their market proposition
  • 94% of buyers say it is important to retain management teams post-acquisition
  • Over 70% of targets do not make their IP apparent to prospective buyers
  • Three quarters of buyers expect at least 40% of a target’s clients to be blue chip
  • Deal structures are improving for sellers

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October 2017: Consulting M&A Update

By Ramone Param, Associate Director, Equiteq

There was notable activity in October from a range of prolific acquirers of consulting firms, particularly those active within the IT Services segment. Major deals included DXC Technology’s acquisition of Logicalis SMC, Orange Business Services’ acquisition of Business & Decision and Office Depot’s acquisition of CompuCom. There were also two notable digital acquisitions announced by Cognizant and three healthcare-focused deals announced by Atos. Equiteq was also pleased to advise VISEO on their acquisition of Singapore-based IT Services firm NAIT Consulting and property consulting firm McBains Cooper on their sale to RSBG.

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Build or Buy? Should you acquire?

In his three-part series, Build or Buy? Equiteq’s Adam Blatchford discusses the pillars for successful growth through acquisition. Adam begins by addressing the fundamental question: Should you acquire?

As a shareholder, you have set goals, both personally and for your firm.

Those goals may include building enough equity value to retire, start a new venture, or support your family; everyone is different, but most owners have a timescale and an amount in mind.

Acquisition could help you achieve those shareholder goals; it can add value to your firm if it is carefully and clearly aligned to your overall business strategy.

Acquisition is not a strategy in itself, it is a means which can be used to deliver the strategic needs of your business plan. First your strategy must be aligned to your shareholder goals, then you can consider if acquisition is the right way to accomplish that strategy.

There are right and wrong ways to grow through acquisition; you want to be scaling smart, ensuring business growth translates into equity value growth by avoiding mistakes and missteps, so that you can deliver your business plan and create value in your firm. The best way to do this is to view your firm through the eyes of a buyer, considering how the shape of firm you are building will be attractive to a future investor.

There are a number of ways that acquisition can be valuable to deliver your strategic needs and to simultaneously build value to a potential buyer.

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Q3 M&A Update: Robust overall global deal activity across the consulting sector, with large variations by segment

  • Overall global deal activity +1% year-on-year
  • Strong rise within Management Consulting and Media segments
  • Strongest deal flow in North America
  • Equiteq Consulting Share Price Index reaches new highs

By Ramone Param, Associate Director, Equiteq

Overall global deal activity in the consulting sector rose by 1% year-on-year. Deal volumes were flat as compared with the second quarter. These overall trends masked large variations in deal activity amongst market segments. The Equiteq Consulting Share Price Index continues to show record highs as investor confidence in the sector remains strong.

M&A Activity strongest in the Media Agency and Management Consulting segments

Despite notable deals occurring in HR and IT, deal activity fell in these segments. There was a strong rise in M&A within Management Consulting and Media. Engineering deal activity rose strongly against the prior quarter, but remains broadly flat on the same quarter last year.

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Virtual Reality and Augmented Reality are expanding creative experiences beyond gaming and entertainment

By Ramone Param, Associate Director, Equiteq.

We recently attended Worlds Fair Nano in New York and experienced some of the exciting innovations that are being developed in the space of Virtual Reality (VR) and Augmented Reality (AR). These immersive technologies are rapidly evolving and have been mentioned as capabilities of strategic interest by many of the prolific buyers of digital consulting firms that we are in dialogue with. VR involves creating digital worlds through headsets and AR encompasses enhancing reality with digital content. Mixed Reality (MR) is a term used to describe AR effects being used in VR headsets or smartglasses. According to MarketsandMarkets, the global AR and VR market is expected to reach $151.3bn by 2022 (growing at a CAGR of 70.4% between 2016 and 2022).

Benefits of Immersive Technologies in Brand Engagement and Design

Immersive technologies have already broadened their applicability from gaming and entertainment. According to a recent survey by GfK, the top three activities that customers expect to undertake using VR include education, design and communication. We also expect these trends to have a significant impact on advertising, travel and shopping.

Those companies that effectively use immersive technologies to engage customers will have an advantage over competitors as they develop electronic empathy with their prospective and existing clients through linking virtual, physical and emotional realities. Some commentators suggest that AR has the potential to bring a physical presence to online shopping, where brands may begin to develop virtual spaces where customers can try on clothes or test products.

In design, VR also enables designers across industries to accurately design complex projects with customers before they go into production. AR then permits clients to preview and experience their designs in real-world spaces.

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September 2017: Consulting M&A Update

By Ramone Param, Associate Director, Equiteq

Over September, we observed high-profile deals from prolific knowledge-intensive services acquirers across a variety of transforming spaces of the consulting market, including digital transformation, Salesforce consulting, real estate advisory, benefits consulting and traditional business consulting. In the last month, Equiteq advised four of its clients on the sale of their business to the practice of a larger group.

Selected Consulting M&A announced in September:

Note 1: Based on 2016 LFY Revenue

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