2017 was a year of continued growth for Equiteq and further disruption of business models, which is transforming the industry that we have been tracking for 15 years. The disruption of the traditional consulting model from technology-enabled innovation, combined with economic trends, has led us to transition the definition of our industry coverage from consulting to the broader transforming knowledge economy. Our Global Knowledge Economy M&A report delivers you with actionable intelligence into the latest M&A and equity market trends across the knowledge economy, along with tips on how to consider these findings in the context of growing and selling your consulting or technology firm.
CMF Associates, a provider of transaction and transition-focused financial, operational and human capital solutions, was successfully sold to professional services firm CBIZ, Inc. The US-based firm services private equity firms and their portfolio companies across North America.
Equiteq were initially called upon to determine CMF’s market attractiveness and then hired as the exclusive sell-side advisor for the transaction process.
In a recent interview with Financier Worldwide, David Jorgenson, chief executive of Equiteq, suggests deal flow in 2018 will be supported by continued low interest rates and large pools of capital available for acquisitions among both strategic buyers and private equity investors.
With the forecast for M&A in 2018 predicted to be as lucrative as 2017, it’s anticipated businesses will continue to see a rise in unsolicited approaches from buyers. In fact, about a third of Equiteq transactions start with a client receiving an approach from a buyer.
However, despite a seller receiving an enquiry, there is no guarantee that a deal will be done. In reality, given the number of companies looked at by Trade and PE investors, the chance of it closing can be relatively low, so taking the right approach from the very beginning is essential in maximizing the opportunity and minimizing the opportunity cost of wasted effort.
In this blog Bruce Ramsay, managing director, business development at Equiteq, shares his thoughts on how best to manage the process from initial approach to a closed deal.
The final quarter of 2017 saw global deal activity in the consulting sector fall by 4% year-on-year and decline 1% as compared to the third quarter. As frequently observed, there were significant variations in deal activity by region and amongst market segments. There is strong buyer appetite for deals as we commence 2018. Continue reading →
2017 was a busy year for Equiteq, closing deals and advising consulting firm owners on their growth and exit strategies across Europe, the US, Australia and Asia. Within our market there are unique takeaways and insights for owners to consider when thinking about a sale.
As owners and acquirers set their 2018 priorities, we recap the learnings from Equiteq’s most read blogs of 2017.
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.
Equiteq is pleased to announce that it has advised CMF Associates (“CMF”), a leading provider of financial and operational consulting services to the private equity sector, on the sale of its business to CBIZ, a national, publicly-traded professional business services firm.
This transaction highlights Equiteq’s position as the leading global provider of advisory services exclusively to firms in the knowledge-intensive business services sector.
Founder and Managing Partner at CMF, Thomas Bonney said, “CMF sought a committed partner who shared our growth-oriented vision of scaling our position as a premier service provider to private equity and their expanding portfolio. We found in CBIZ an advocate that will provide us with offices across the country, complementary tangential services and the resources to drive portfolio value creation in a more comprehensive way and on a national scale.”
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.
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.
By Alex White, Associate Director, and Ramone Param, Associate Director, Market Intelligence & Buyer Coverage.
Private equity (PE) providers are enthusiastic investors in knowledge intensive business services. Last year was marked by some headline grabbing exits and new investments by the largest global buyout firms and this had a re-affirming effect on PE’s keen interest in this space. These included KKR’s acquisition of Optiv Security from Blackstone, as well as the sales of AlixPartners by CVC and the divestment of Carlyle’s remaining stake in Booz Allen Hamilton.
Our own experience of achieving many great outcomes for clients who secured PE investment in 2016, and the line of investors queuing at our door for deal flow, bodes well for owners in 2017.
Sustaining growth in successful businesses – an owners challenge
A challenge for many owners of valuable businesses is the changing attitude to risk that creeps up as success is achieved. It’s natural for sentiment to shift from value creation to value preservation. While natural, it’s also a sure sign that owners’ personal financial portfolios are out of balance and a warning that excess cautiousness will be sub-optimal for their business in the longer term.