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.
Our fourth annual global survey of buyers of consulting businesses delivers current, actionable intelligence in the five segments Equiteq specializes in: Management consulting, IT consulting, Media & Marketing, Engineering consulting and HR consulting. Findings, published today, reveal:
Buyers expect to initiate 50% more acquisitions year-on-year
Convergence continues to be a key trend as buyers look to diversify
55% of buyers think targets could be better at communicating their market proposition
94% of buyers say it is important to retain management teams post-acquisition
Over 70% of targets do not make their IP apparent to prospective buyers
Three quarters of buyers expect at least 40% of a target’s clients to be blue chip
There was notable activity in October from a range of prolific acquirers of consulting firms, particularly those active within the IT Services segment. Major deals included DXC Technology’s acquisition of Logicalis SMC, Orange Business Services’ acquisition of Business & Decision and Office Depot’s acquisition of CompuCom. There were also two notable digital acquisitions announced by Cognizant and three healthcare-focused deals announced by Atos. Equiteq was also pleased to advise VISEO on their acquisition of Singapore-based IT Services firm NAIT Consulting and property consulting firm McBains Cooper on their sale to RSBG.
Overall global deal activity in the consulting sector rose by 1% year-on-year. Deal volumes were flat as compared with the second quarter. These overall trends masked large variations in deal activity amongst market segments. The Equiteq Consulting Share Price Index continues to show record highs as investor confidence in the sector remains strong.
M&A Activity strongest in the Media Agency and Management Consulting segments
Despite notable deals occurring in HR and IT, deal activity fell in these segments. There was a strong rise in M&A within Management Consulting and Media. Engineering deal activity rose strongly against the prior quarter, but remains broadly flat on the same quarter last year.
We are delighted to announce that Equiteq has won the Boutique Investment Banking Firm of the Year at the 9th Annual International M&A Advisor Awards. This recognition from The M&A Advisor comes hot on the heels of the 15th Annual American Business Awards, where Equiteq was awarded Bronze winner for Company of the Year – Banking & Financial Services – Small.
The Co-CEO and President of The M&A Advisor, David Fergusson, said “The 2017 International M&A Award winners represent the best of international M&A industry in 2016 who earned these honors by standing out in a group of very impressive finalists.”
Commenting upon the award, our CEO, David Jorgenson, said “I’m thrilled that for the second year in a row, an independent judging committee of top M&A industry experts determined that Equiteq should receive another highly acclaimed award. Equiteq has built a unique global boutique model that is 100% focused on helping owners of knowledge-intensive business services firms achieve their exit goals through sale preparation and transaction execution. We are very proud that our individuality and expertise has set us apart.”
FIS sells majority stake in Capco to private equity
Clayton, Dubilier & Rice announced their acquisition of a 60% majority stake in Capco from FIS, a leader in financial services technology. Capco is the public brand for FIS’ management consulting business and specializes in business, digital and technology consulting services for the financial services industry. FIS acquired Capco for $292m in 2010 and will receive net cash proceeds of $477m from the sale, while retaining a 40% stake in the business.
New Mountain acquires OneDigital Health and Benefits
OneDigital, one of the top buyers that we identified in the HR space, announced that it has been acquired in an all-cash deal by private equity investor New Mountain Capital. New Mountain is acquiring a majority ownership in the business from Fidelity National Financial Ventures for a reported $560m. The investment will be aimed at providing strategic guidance and industry expertise, while helping drive OneDigital’s continued growth.
OneDigital is the United States’ largest provider of employee benefits services and offers employers a combination of strategic advisory, analytics, compliance support, HR capital management tools and comprehensive insurance offerings. The business serves 35,000 companies and manages c.$4 billion in premiums.