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.
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.
Accenture acquired creative agency Wire Stone, which provides a range of strategy and marketing campaign services that develop digital consumer experiences. Wire Stone was founded in 2000 in San Francisco and has built a reputation for the use of technology and data to improve marketing campaign return on investment. The business has worked with a number of blue-chip clients including, Microsoft, HP, PayPal and eBay.
As highlighted in our latest quarterly M&A update, Accenture continues to be highly acquisitive and is developing Accenture Interactive’s capabilities and talent across marketing and consulting. According to a recent report by Adweek, Accenture Interactive’s projected 2017 revenue of $6bn places it above Havas Worldwide, although it is not a holding company and therefore does not rank among the “Big Six” of WPP, Omnicom, Publicis, Havas, IPG and Dentsu.
Artificial intelligence (AI) is no longer the domain of science fiction. Instead, it’s rapidly becoming a dominant force in the Fourth Industrial Revolution – that of digital transformation.
It’s likely that many owners of knowledge-intensive services businesses, such as IT services, media and marketing agencies or consulting firms, will be considering how AI fits into their strategy.
Further, those looking to sell their business in the future would do well to consider how AI might enhance their market position. Buyers are increasingly interested in acquiring knowledge-intensive businesses with these capabilities, which means those demonstrating the foresight to embrace AI sooner rather than later could expect to command a premium valuation.
Equiteq’s quarterly market updates provide an indicative guide to current M&A market conditions in the consulting industry. However, it should be noted that we typically observe large variations between quarterly M&A volumes, which are not always reflective of longer term trends.
M&A activity was mixed in the second quarter after a strong start to the year. Overall global deal activity in the consulting sector fell by 12% quarter-on-quarter. Deal volumes fell by just 2% on the same quarter last year. The Equiteq Consulting Share Price Index rallied in the second quarter, achieving similar returns to the S&P 500.
DXC Technology acquires Microsoft Dynamics 365 specialist Tribridge
DXC Technology made its first acquisition after forming in April following the merger of CSC and the Enterprise Services unit of Hewlett Packard Enterprise. The technology giant acquired 740-person Microsoft Dynamics 365 consulting firm Tribridge and its managed cloud business Concerto Cloud Services. The deal is expected to enhance the buyer’s consulting offerings focused on clients in health care, government, consumer packaged goods, and professional services.
Tribridge is one of the largest independent integrators of Microsoft Dynamics 365 and is a six-time winner of Dynamics 365 Worldwide and U.S. Partner of the Year. Tribridge will become part of DXC Eclipse, an IT application consulting business acquired by the business in October 2015 for c.$300m.
Accenture acquires Salesforce specialist Phase One
Accenture agreed to acquire Phase One Consulting Group, a Virginia-based digital transformation specialist for the federal market with strong capabilities in Salesforce cloud solutions. Phase One will join Accenture Federal Services upon completion of the deal.
Phase One offers secure cloud implementation and consulting services to federal agencies for projects across various government sectors. The business had backing from RLJ Equity Partners, who acquired Phase One in early 2015. The company also received an undisclosed amount of development capital from Salesforce Ventures in September of last year.