Notable deals included Capgemini’s acquisition of LiquidHub, Veritas Capital’s acquisition of PwC US’s government consulting business, Valtech’s acquisition of True Clarity and Livingbridge-backed Catalyst Development’s acquisition of Knadel.
Equiteq advised Ducker Worldwide on its sale to Frontier Strategy Group and Axentel Technologies on its sale to Park Place Technologies.
The Equiteq Consulting Share Price Indexfluctuated over the month and ended the period broadly flat.
Capgemini acquires digital customer experience firm LiquidHub
Target: LiquidHub is a US-headquartered global customer engagement company that help companies improve customer experience and drive growth.
Buyer: Capgemini is a France-headquartered global leader in consulting, technology services and digital transformation.
Deal Value: EUR400m (1.8x FY17 Revenue)
Deal Insight: In October of last year, The Times of India reported that Cognizant and Apax Partners were among shortlisted suitors for a potential acquisition of LiquidHub for as much as $600m. At the beginning of February, Capgemini announced that it would acquire the business for almost two times its revenue.
LiquidHub was founded in 2000 and raised $52.54m of Series B venture funding from ChrysCapital in 2014. The investment put the company’s pre-money valuation at $116.67m and enabled it to make investments in its growth including completing a number of acquisitions over 2016 and 2017. The company’s shareholder includes key management and investor ChrysCapital.
Major deals included Starr Investment Holdings’ acquisition of ACA Compliance, EY’s acquisition of Citizen, KPMG’s acquisition of Cyberinc, Oliver Wyman’s acquisition of Draw and the newly formed Kantar Consulting’s acquisition of Mash Strategy.
The Equiteq Consulting Share Price Index achieved strong gains of 6% over the month, with robust rises in all segmental indices apart from Media.
Starr Investment Holdings’ acquires ACA Compliance from New Mountain Capital
Target: ACA Compliance Group is a leading provider of risk management and technology solutions to the financial services industry in the U.S. and Europe.
Seller: New Mountain Capital is a U.S.-based private equity investor, with a focus on building and growth, pursuing long-term capital appreciation.
Buyer: Starr Investment Holdings is a New York-based investment adviser that invests in privately-held technology-enabled services businesses with a particular focus on industries such as financial services and healthcare services.
Deal Insight: ACA Compliance was acquired by a consortium of investment firms including New Mountain Capital through an LBO in December 2013 for an undisclosed sum. Since the investment, ACA has rapidly grown its team. It has benefited from the rise in demand for risk and corporate governance services from financial services clients disrupted by new regulatory and compliance requirements since the last financial crisis. Over the last few years, ACA invested in new technologies and expects to develop these further with its new backing from Starr. The new capital is also expected to enable ACA to expand into new service lines and industry verticals across the globe.
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. Continue reading →
Pathway to Your Potential completes strategic alliance with Mercer Australia
Last quarter proved to be a busy one for Equiteq and its clients with consulting deals closing around the world. The following recaps the sale and investment opportunities completed for clients in Q4 2017.
The BioTech Quality Group joins Assystem S.A. Industry: Life sciences consulting Date: 1 December 2017 Geography: Central Europe
Equiteq facilitated the sale of Life sciences consulting client, The Biotech Quality Group (BQG), to international engineering group, Assystem S.A.
BQG specializes in performance management and regulatory compliance in Europe’s pharmaceutical and biotech industries, and has developed a range of bespoke methods and tools aimed at increasing the maturity and transforming the practices of the (bio)pharmaceutical industry.
The strategic acquisition of BQG significantly moves Assystem forward in the implementation of its Life sciences strategy of becoming a European leader in the areas of commissioning, certification, validation and regulatory compliance in the European pharmaceutical and biotech industries.
The deal is also indicative of the growing volume of life sciences M&A expected to take place in 2018. Recent reports by EY and law firm Baker McKenzie predict a significant increase in deals, with EY estimating 2018 total deal values exceeding $200 billion. According to EY’s report, 60 percent of life sciences executives surveyed in October 2017 plan to actively pursue M&A in the next 12 months, compared with 46 percent in April.
To read our case study on this deal, please click here.
Despite a politically-charged global environment and the increasing number of regulatory hurdles, the high levels of M&A experienced in 2016 have been resilient in 2017 and we have also seen the continuation and evolution of a number of trends.
Looking at M&A broadly, we are seeing that regional differences are no longer as prevalent. In an increasingly global economy, acquirers from Europe and North America alike are taking an active role, canvassing the global market place for M&A opportunities that support their non-organic growth ambitions.
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.
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.