The most prolific acquirers of knowledge-led businesses are undergoing unprecedented diversification and convergence across adjacent consulting segments and sectors. At the same time, digital transformation is driving hybrid business models with consulting, technology and managed service revenue. This change is fuelling high levels of M&A activity from trade and private equity investors, which we review in our 2017 M&A report. For owners considering selling their business, an appreciation of these trends is critical to uncovering the synergistic buyers that may offer the highest value.
Convergence between consulting offerings
Global consulting clients are increasingly looking to their advisors for best-in-class, end-to-end consulting solutions. These trends are driving established consulting buyers to use M&A to enter new geographies and acquire complementary capabilities.
The pervasive adoption of cloud solutions is continuing to transform businesses across industries. The most commonly cited drivers for the transition from on-premise to cloud-based technologies are users’ ability to reduce costs, improve risk management and enhance scalability. This evolution in demand is causing widespread disruption to the technology industry, as evidenced by the wave of high-profile restructuring and deal activity amongst the legacy technology players.
Cloud-based applications are complex to implement and manage, which drives demand for cloud services. Salesforce and Workday are considered to be some of the leading vendors of cloud-based applications, with strong networks of specialist consulting partners. We heard at Salesforce’s recent annual Dreamforce conference that they expect a massive increase in the population of Salesforce consultants required globally by 2020. We also regularly receive feedback that there is rising demand and a limited supply of consulting expertise related to Workday. The rising need for capabilities related to both of these technologies is driving organic growth and consolidation in the cloud services space.