I recently listened to Sunil Gupta’s HBR IdeaCast on digital strategy – a topic relevant to many, if not all, of our clients. After providing examples of failed approaches to digital strategy he rightfully points out that in order to be successful, strategies need to incorporate four components:
Operations and value chain
I think this is an incredibly helpful and balanced perspective. When advising companies in the knowledge economy and looking at the M&A focus of the large players, we see far too much focus on a single component, specifically customer engagement. There are perhaps a number of reasons for this, for example you can see immediate success, outcomes are more tangible, etc.
However, where we see organizations making significant strides is when they take a far more comprehensive approach to their digital strategy and look beyond the digital experience of the customer as their sole focus.
M&A activity is strong for specialized operational management consulting businesses that provide innovative, data-driven process improvement and cost reduction solutions
We continue to receive feedback from the most prolific buyers of knowledge-intensive services firms that expertise in helping healthcare providers with process improvement and operational efficiency is of high strategic importance for growth. A confluence of demographic, economic and regulatory drivers are forcing providers to improve care standards and enable efficiencies. Providers are also increasingly being compelled to invest in new digital technologies that can create data-driven productivity improvements and competitive advantages. These industry trends are driving strong demand and premium valuations for well-positioned operational consulting firms working with healthcare providers. Equiteq experienced this demand first hand in its sale of c3/consulting to Ankura. c3 has a track record of providing management consulting services to a variety of leading healthcare organizations in the US.
The General Data Protection Regulation (GDPR), implemented May 25th, has introduced a range of new compliance and legal requirements for businesses across all sectors and industries, mainly the need to be accountable with personal data.
Equiteq, with insights from Bart Schermer of Dutch consultancy Considerati, examine the ways professional services consulting firms can turn the compliance burden posed by GDPR into a competitive advantage.
Buyers are paying premiums for specialized strategy consulting businesses that provide impactful product commercialization solutions for life sciences companies
Based on our in-depth discussions with global buyers and the recent flurry of M&A activity, acquisition demand for life sciences strategy consultancies is exceptionally high. Recent landmark acquisitions by both strategic and financial buyers were struck at premium valuation levels – and as the supply of high-quality acquisition targets continues to dwindle, valuation levels of independent consultancies of scale could rise even further.
CMF Associates, a provider of transaction and transition-focused financial, operational and human capital solutions, was successfully sold to professional services firm CBIZ, Inc. The US-based firm services private equity firms and their portfolio companies across North America.
Equiteq were initially called upon to determine CMF’s market attractiveness and then hired as the exclusive sell-side advisor for the transaction process.
In a recent interview with Financier Worldwide, David Jorgenson, chief executive of Equiteq, suggests deal flow in 2018 will be supported by continued low interest rates and large pools of capital available for acquisitions among both strategic buyers and private equity investors.
With the forecast for M&A in 2018 predicted to be as lucrative as 2017, it’s anticipated businesses will continue to see a rise in unsolicited approaches from buyers. In fact, about a third of Equiteq transactions start with a client receiving an approach from a buyer.
However, despite a seller receiving an enquiry, there is no guarantee that a deal will be done. In reality, given the number of companies looked at by Trade and PE investors, the chance of it closing can be relatively low, so taking the right approach from the very beginning is essential in maximizing the opportunity and minimizing the opportunity cost of wasted effort.
In this blog Bruce Ramsay, managing director, business development at Equiteq, shares his thoughts on how best to manage the process from initial approach to a closed deal.
In his three-part series, Build or Buy? Equiteq’s Adam Blatchford discusses the pillars for successful growth through acquisition. In part one Adam addressed the strategic advantages acquisitions can offer.
Here in part two, he looks at the ways a professional service firm can fund an acquisition.
Generally, M&A news tends to give the impression that acquisition is an exercise exclusive to huge corporations with big cash balances. In the last year the consulting sector has seen a number of multi-billion dollar deals, including Blackstone spending $4.8 billion for Aon’s HR Outsourcing business to create Alight Solutions, and $2.6 billion for British engineering consultancy Atkins from SNC-Lavalin.
This perception fails to scratch the surface of acquisitions and hides the real picture. Of more than 2,500 consulting deals that took place in 2017, the mean deal size was a more reasonable $69 million. The median deal was even lower at $12 million, meaning half of all deals took place below this threshold. These numbers are far more attainable for a ‘regular’ growth-stage business and demonstrate that an acquisition is more achievable than one might have initially thought.
2017 was a busy year for Equiteq, closing deals and advising consulting firm owners on their growth and exit strategies across Europe, the US, Australia and Asia. Within our market there are unique takeaways and insights for owners to consider when thinking about a sale.
As owners and acquirers set their 2018 priorities, we recap the learnings from Equiteq’s most read blogs of 2017.
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
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.