International firms tap into Asia-Pacific markets with strategic acquisitions of specialist firms

Equiteq’s David Jorgenson and Jean-Louis Michelet met at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia-Pacific region.


In this blog, the final part of their discussion, they both explore the huge opportunities for knowledge-driven services businesses in the Asia-Pacific region.

Simply put, there are massive opportunities in Asia-Pacific for knowledge-driven B2B services companies. While most of the region’s services markets are not as advanced as in more developed economies in Europe and North America, globalization and technological revolution are driving international demand for specialist businesses in Asia-Pacific.

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5 things every consulting firm must know to thrive in Asia-Pacific

Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia-Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia-Pacific region.

This is the third part of their discussion: What advice would you give to consulting firm owners in one of the Asia-Pacific countries?

The consultancy landscape in Asia-Pacific has changed in the last few years. There has been a strong development in the use of consultants as the regional economies have grown and become less dependent on the primary sector, and have seen a surge in secondary and services sectors activities.

A 2016 report from the United Nations Economic and Social Commission for Asia and the Pacific shows the increased activity in the services sector is partly down to its role in facilitating global value chains in the manufacturing sector. It also attributes this to the growth of digital-intensive services in sectors like financial services, telecommunications and digital media and marketing.

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What do M&A opportunities in Asia-Pacific look like?

Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia-Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia-Pacific region.

This is the second part of their discussion: How do the differences between regional APAC markets impact M&A activities in the B2B services sector?

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There are essentially five sub-regions in APAC, each of them with specific characteristics:

  • China, Hong Kong, Taiwan

China is a huge economy, but the services sector is still at a relatively early stage. There aren’t many home-grown companies developed by local entrepreneurs that have reached ‘international investor-grade’. In recent years, however, several large Chinese companies have shown an interest in acquisitions in the region and beyond, with a view to reducing their dependency on their domestic market and gaining international credibility. Hong Kong stands out in this regard, because it’s a vibrant market with established global consultancies.

As an example for China, BlueFocus has managed, through an aggressive acquisition strategy, to boost the topline growth of its digital business, which has accounted for 73% of total group revenue in  2016, doubling the proportion recorded in 2015.

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Global interest in the Asia-Pacific service sector is set to drive a new wave of M&A activity

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Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia Pacific region.

This is the first part of their discussion: What are the challenges and opportunities for the B2B services sector in Asia-Pacific over the coming years?

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The B2B services sector in Asia-Pacific (APAC) is not as developed as its counterparts in North America or Europe mainly because the primary and secondary sectors still remain the main engines of economic growth in the APAC region. As these sectors reach maturity, the services sector will follow suit in the years to come.

Another major challenge for B2B consulting firms in the APAC region was the relatively low appreciation for services in most Asian business cultures. This is mostly the result of the region’s greater emphasis on tangible, physical items that can be traded.

Also labour costs are generally lower in APAC than in Europe or North America – with notable exceptions in Japan, Australia, New Zealand, Singapore and Hong Kong – meaning companies tend to be less pressured to increase productivity by improving their business processes.

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Meet with Pierre Briand, Equiteq Managing Partner at the Microsoft Australia Partner Conference 2016!

Pierre's Microsoft Blog

Pierre Briand, Managing Partner, Equiteq Australia & New Zealand, has been announced as a speaker at the Australia Microsoft Partner Conference 2016 which will take place from 5-8 September on the Gold Coast.

Microsoft Australia Partner firm owners will be able to attend two sessions: A presentation by Pierre on the topic of When is the right time to sell your IT firm? (Tuesday 6th Sept at 1.00pm), and an interactive workshop, conducted jointly with Sylvaine Masson, Director M&A Services, Equiteq Asia-Pacific, on Ready, Steady, GO: Are you investor ready?” (Wednesday 7th at 10am).

With deal multiples remaining high and competition to acquire IT services firms with specialist capabilities strong; now is the perfect time for Microsoft Partners to hear first-hand from IT services M&A experts Equiteq, about who is buying, what they are looking for and how to get the maximum equity value for your firm.

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Key trends in the Australian B2B services M&A market

Australia & ChinaIn 2014 Australia became the second largest M&A market in Asia-Pacific, behind only China in volume and value terms. And across all industries, 2015 saw Australia M&A totals reach $146b, versus $117b in 2014, highlighting that there are exciting opportunities for both sellers and buyers in the “Lucky Country”.

The B2B services market in Australia is mature and vibrant across a number of segments, such as digital marketing and engineering. And while growth has slowed as a consequence of the evolution of the Chinese economy and the mining industry, it’s good timing for acquirers seeking targets and for sellers interested in joining larger organizations. The Australian dollar is at its lowest point against the US dollar in 7 years, a situation that is particularly appealing for international buyers. The country is demonstrating economic stability with prudent policy making, close trading relationships with China and well-targeted fiscal stimulus. The middle market and SMEs are the cornerstone of the Australian economy.

All the major global players in B2B services have operations in Australia and cross-border deal flows are healthy, with foreign investment (30% from the US, 45% from Asia, 10% from the UK) and outbound acquisitions.

Data from our Global Consulting M&A Report 2016, the only publicly available information on the global consulting M&A market, found that 75% of deals done worldwide were completed by only 5 countries: the US, UK, Australia, France and Canada.

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Asia Pacific accounted for around 13% of all deals, largely driven by activity in Australia. The country experienced 3% growth in 2015 deal volumes, recovering from a 2014 decrease in deal activity of 5.8%. Its deal volume increases in 2015 were aided by falling commodity and currency prices that helped keep acquisition targets in the region competitive to international buyers.

Our research shows that buyers’ acquisition expectations have more than doubled in the past year. This reflects a growing M&A market in consulting, IT and other segments, underpinned by buyer appetite that continues to increase in size and volume across corporate and private equity buyers. With Australia having seen 25 years of consecutive economic growth and enjoying a thriving B2B services sector, we can see an exciting year of activity in this market.

If you are preparing to sell your consulting firm and would like to discuss your exit plans, please contact Pierre Briand, Managing Partner, on Pierre.Briand@equiteq.com

Facts and figures on Australia:

  • Population of 24m with Melbourne and Sydney combined reaching almost the 10m mark
  • 2015: GDP +2.3%, CPI +1.7%, unemployment rate 5.9%, GDP/capita US$64k
  • 12th economy in the world and AAA rating
  • IT and new tech sector ca $50b
  • Australia’s “soft power” in Asia: 260,000 Asian students in Australia

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