September 2017: Consulting M&A Update

By Ramone Param, Associate Director, Equiteq

Over September, we observed high-profile deals from prolific knowledge-intensive services acquirers across a variety of transforming spaces of the consulting market, including digital transformation, Salesforce consulting, real estate advisory, benefits consulting and traditional business consulting. In the last month, Equiteq advised four of its clients on the sale of their business to the practice of a larger group.

Selected Consulting M&A announced in September:

Note 1: Based on 2016 LFY Revenue

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Equiteq’s Consulting Sector M&A Deals: September 2017

  • EOH acquires AFON Pte Ltd.
  • GNC Group merges with Grant Thornton Australia
  • Investit joins Accenture
  • Certeco merges with P2 Consulting

“We are seeing an increasing trend of well-managed consulting firms joining the practice of a larger group to deliver a joint growth strategy. Over the past month, the deals Equiteq has completed highlight this growing trend.”

Pierre Briand, Managing Director, Head of M&A and Strategic Advisory, Australia – New Zealand, Equiteq

EOH acquires AFON Pte Ltd.
Deal Size: Undisclosed Industry: IT services Date: September 13 2017 

Equiteq advised EOH, Africa’s largest technology and services provider, on its acquisition of AFON Pte Ltd, a Singapore-based IT services firm specializing in the delivery of ERP solutions.

Established in 1999, AFON Pte provides enterprise resource planning solutions to SMEs, based on a select group of platforms from partners such as SAP and Microsoft. AFON Pte’s offering is a combination of end-to-end ERP solutions to help SMEs boost efficiency, visibility and control, and advisory services by qualified accountants and IT professionals for successful ERP implementation.

For EOH, the deal signifies the company’s intention to expand its global presence into South-East Asia and builds on its international presence in over 50 countries.

EOH’s global technology service offering is anchored in market-driven insights and industry-specific solutions which is best secured by understanding their clients’ culture. Expanding its global presence into South-East Asia with the acquisition of AFON Pte EOH has established an important bridgehead in the region and remains closely connected to the communities it seeks to serve.

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August 2017: Consulting M&A Update

By Ramone Param, Associate Director, Equiteq

Accenture acquires marketing agency Wire Stone

Accenture acquired creative agency Wire Stone, which provides a range of strategy and marketing campaign services that develop digital consumer experiences. Wire Stone was founded in 2000 in San Francisco and has built a reputation for the use of technology and data to improve marketing campaign return on investment. The business has worked with a number of blue-chip clients including, Microsoft, HP, PayPal and eBay.

As highlighted in our latest quarterly M&A update, Accenture continues to be highly acquisitive and is developing Accenture Interactive’s capabilities and talent across marketing and consulting. According to a recent report by Adweek, Accenture Interactive’s projected 2017 revenue of $6bn places it above Havas Worldwide, although it is not a holding company and therefore does not rank among the “Big Six” of WPP, Omnicom, Publicis, Havas, IPG and Dentsu.

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Could you enhance your business valuation by embracing AI?

Artificial intelligence (AI) is no longer the domain of science fiction. Instead, it’s rapidly becoming a dominant force in the Fourth Industrial Revolution – that of digital transformation.

It’s likely that many owners of knowledge-intensive services businesses, such as IT services, media and marketing agencies or consulting firms, will be considering how AI fits into their strategy.

Further, those looking to sell their business in the future would do well to consider how AI might enhance their market position. Buyers are increasingly interested in acquiring knowledge-intensive businesses with these capabilities, which means those demonstrating the foresight to embrace AI sooner rather than later could expect to command a premium valuation.

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Global consulting M&A mixed in the second quarter, after a strong start to the year


By 
Ramone Param, Associate Director, Equiteq.

Equiteq’s quarterly market updates provide an indicative guide to current M&A market conditions in the consulting industry. However, it should be noted that we typically observe large variations between quarterly M&A volumes, which are not always reflective of longer term trends.

M&A activity was mixed in the second quarter after a strong start to the year. Overall global deal activity in the consulting sector fell by 12% quarter-on-quarter. Deal volumes fell by just 2% on the same quarter last year. The Equiteq Consulting Share Price Index rallied in the second quarter, achieving similar returns to the S&P 500.

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How to put margins at the center of your business

There’s perhaps no topic more important for consulting firms than improving profits. Because of this, we recently ran two 30-minute webinars on improving margins. This week, we’re looking at questions asked during the first of these, which explored how to put margins at the center of your business.

If 20% EBIT is a good target for a consulting firm, would a firm achieving 40% EBIT be viewed as considerably more valuable?

At face value, a 40% margin business might appear more valuable, but it depends on whether the buyer considers this sustainable.

Some will interpret a margin of this size as indication that the firm has under invested in itself and will discount this. Because of this, we typically recommend that 50% of revenue be spent on the delivery of your services and 30% should be allocated for overheads – such as selling or marketing the business, admin costs or recruitment or IT fees – leaving the remaining 20% for EBIT.

Firm owners might be wise to consider investing any EBIT above 20-25% into growing the top-line instead.

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Equiteq sells behavioural assessment and development consultancy to PSI Services LLC


Equiteq, a global consulting and IT services sector M&A specialist, is pleased to announce the sale of the UK based A&DC Group (“a&dc”) to PSI Services LLC headquartered in California. As leaders in behavioural assessment and development, a&dc provides consultancy services and a comprehensive range of ready-to-use, tailored and bespoke products across the talent management spectrum.

Equiteq acted as exclusive financial advisor to a&dc. The transaction completed on June 5, 2017.

The acquisition of a&dc strengthens PSI’s core Talent Assessment offering.

Nigel Povah, CEO of a&dc commented “When I started a&dc 30 years ago, I was passionate about providing great assessment and development content. The a&dc portfolio – with over 250 assessments – will continue its journey alongside PSI’s assessment technology, which will drive the delivery of our robust assessment content into the digital era.”

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