Healthcare Consulting Insights: Life sciences strategy consulting M&A

By Matt Hasson, Managing Director and Ramone Param, Director

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.

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Communication is key – and can earn a premium in the health market

Those in marketing communications (marcoms), understand the value in delivering a clear message to the right audience, in the right way, and at the right time. The developments seen in the health and life sciences sector in recent years have created significant demand for marcoms services. Expertise range from the design of patient portals for health care providers, to effective and compliant strategies for pharmaceuticals and data-informed messaging for self-managed care devices.

Marcoms agencies that have adapted well against this transformative backdrop have seen high demand for their services and, in some cases, their entire business.

Here we look at the current challenges marketing and communication firms are tackling for clients in the health sector, as well as the opportunities for specialist agencies looking for acquirers or Private Equity investment.

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April 2018: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals profiled include Infosys’ acquisition of WONGDOODY, HPE’s acquisition of RedPixie and Wavestone’s acquisition of Xceed.
  • The Equiteq Knowledge Economy Share Price Index achieved robust rises over the period.

Infosys deepens its creative agency skills with WONGDOODY

Target: WONGDOODY is a US-based creative agency with studios in Seattle and Los Angeles providing strategy, research, brand and marketing positioning, creative design, advertising and production services across industries.

Buyer: Infosys is a global listed technology services player headquartered in India.

Deal Value: $75.0m

Deal Insight: This transaction exemplifies two important market trends. Firstly, it demonstrates the convergence of creative media with technology and consulting, as large technology players look to broaden their customer-focused advisory skills and take a larger share of the growing digital transformation consulting market. The deal also highlights the demand from the Indian outsourcers for US-based high-margin capabilities that enable them to build skills further up the consulting value chain.

The deal develops Infosys’ global connected network of Digital Studios to help clients respond to digital disruption of their industries. WONGDOODY builds on Infosys’ acquisition of UK-based product design and customer experience innovator Brilliant Basics, which was acquired last year for c.$9.7m.

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Knowledge economy M&A activity was solid in 2017, with digital disruption driving demand and premium valuations

By Ramone Param, Director, Equiteq

2017 was a year of continued growth for Equiteq and further disruption of business models, which is transforming the industry that we have been tracking for 15 years. The disruption of the traditional consulting model from technology-enabled innovation, combined with economic trends, has led us to transition the definition of our industry coverage from consulting to the broader transforming knowledge economy. Our Global Knowledge Economy M&A report delivers you with actionable intelligence into the latest M&A and equity market trends across the knowledge economy, along with tips on how to consider these findings in the context of growing and selling your consulting or technology firm.

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Equiteq Advised Knowledge Economy M&A Deals: Q1 2018

  • Insight Strategy Advisors joins Precision Value & Health
  • Ducker Worldwide joins Frontier Strategy Group
  • Axentel joins Park Place Technologies
  • 8works joins Oliver Wyman

We have had a strong start to 2018 across regions, advising a variety of knowledge economy clients on their equity growth and closing a number of high-profile transactions. Here we highlight our advisory work with clients which resulted in M&A deal closures during the first quarter.

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March 2018: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals included Apax’ acquisition of Business Integration Partners (Bip), Duff & Phelps’ acquisition of Kroll, Accenture’s acquisition of MXM (Meredith Xcelerated Marketing) and the completion of Altran’s acquisition of Aricent.
  • Equiteq advised Bip on its sale to Apax, c3 consulting on its sale to Ankura and 8works on its sale to Oliver Wyman.
  • The Equiteq Knowledge Economy Share Price Index dipped slightly over the period.

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Case study: Supporting CMF Associates in their search for excellent value and a shared vision

Background

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.

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Equiteq supports the best of Australian and New Zealand professional services

By Pierre Briand, Managing Director, Equiteq Australia and New Zealand

This year’s Financial Review Client Choice Awards proved that the Australian and New Zealand professional services sector is going from strength to strength. At a glittering award ceremony held in Melbourne last night, professional services firms and practitioners were rewarded for the excellent quality and service they provide to their clients.

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February 2018: Consulting M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • 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 Index fluctuated 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.

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8 ways to handle an unsolicited bid for maximum value

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.

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