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.
Major dealsprofiled include Infosys’ acquisition of WONGDOODY, HPE’s acquisition of RedPixie and Wavestone’s acquisition of Xceed.
The Equiteq Knowledge Economy Share Price Indexachieved 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.
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.
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.
Major dealsincluded 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 advisedBip 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 Indexdipped slightly over the period.
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 →
Xafinity is acquiring the actuarial, pensions administration and investment consulting businesses of Punter Southall, in a deal valued at £153m. Xafinity provides pensions actuarial advice and administration services to 550 occupational pension funds in the UK. As part of the transaction, it will acquire Punter Southall Limited, Punter Southall Investment Consulting and Punter Southall Administration Limited for a combination of cash and shares. The deal is expected to create the largest pure-play pensions consultancy in the UK, with c.900 employees across the country, that generates over £100m of revenue. After the transaction, Punter Southall’s remaining operations will be focused on workplace savings, health and protection consulting and wealth management.
The deal is set to be the first major acquisition in the investment advisory industry since the Financial Conduct Authority referred the industry to the UK’s competition regulator. The referral is expected to result in new rules that distributes clients of the big three (Aon, Mercer and Willis Towers Watson), while driving consolidation amongst smaller advisers.
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.