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.
Blackstone acquires Aon’s human resources outsourcing business
The Blackstone Group agreed to pay up to $4.8bn to acquire Aon’s human resources outsourcing business. The Aon unit processes work benefits for 15% of the US population and is a provider for cloud-based human resources management systems. Blackstone is believed to have prevailed over buyout firm Clayton Dubilier & Rice in an auction for the business.
Aon acquired the business in 2010 as part of its $4.9bn acquisition of Hewitt Associates. The transaction with Blackstone is expected to enable Aon to focus on growth areas like cybersecurity and health insurance, while using part of the proceeds to buy back shares.
The deal will be structured whereby Aon receives $4.3bn in cash, plus up to another $500m in earn-out.
By Ramone Param, Associate Director – Market Insights & Buyer Coverage, Equiteq
Global M&A activity across the Knowledge-Intensive Services sector, as tracked by the Equiteq Consulting M&A Index, remained strong in the final quarter of 2016. Deal volumes were broadly flat in comparison to a robust prior quarter and rose in comparison to the same quarter last year. The conclusion of the U.S. presidential race has been followed by sharp rises in investor confidence and the Equiteq Consulting Share Price Index has rallied strongly throughout most of November and December, outperforming both the S&P 500 and FTSE 100. The overall Equiteq Consulting Share Price Index is now rallying at an all-time high.
As we anticipated, deal activity in the last quarter remained buoyant in the IT services sector. Appirio, was acquired by Wipro for $500m, positioning the buyer as the leading Indian technology services player in the cloud consulting space. Appirio was considered a prized acquisition opportunity amongst a range of potential suitors after a wave of deals left Appirio as one of the largest independent cloud consulting specialists remaining in the market.
Equiteq is pleased to announce that it’s client, PMsquare has merged its Australian and Asian businesses with Cornerstone Performance Management. The deal was announced on July 11, 2016. Equiteq acted as exclusive financial advisor to PMsquare.
Both organizations are IBM Premier Business Partners with a focus on the Business Analytics solution set. However, the primary geographical focus of PMsquare is in Singapore and the Philippines, whereas Cornerstone has traditionally been focused on the Australian market. PMSquare’s Australian operations will be absorbed directly into Cornerstone Australia in the coming months, whilst the Asian region will retain PMsquare’s branding as part of the Cornerstone Group.
Our global research into M&A activity across all consulting sectors, found that global deal volumes are just short of a 10-year high in the IT consulting sector, so 2016 is looking very promising for the sale of IT consulting firms. The high volumes have been driven by an increase in North American IT consulting deals in 2015. Deal values remained consistently high and the outlook for the IT consulting industry remains strong as various sectors increase their reliance on technology, such as social media, analytics, mobile and cloud.