Equiteq advises Aecus Limited on its sale to The Hackett Group Inc.


Equiteq is pleased to announce the sale of its long-term client, Aecus Limited, to The Hackett Group Inc. Aecus is an award-winning European consultancy that helps clients optimize business process outsourcing (BPO), IT outsourcing (ITO) and robotic process automation (RPA) through benchmarking and implementation consulting.

Equiteq acted as exclusive financial advisor to Aecus Limited and its shareholders on the sale of the business having previously worked with the company for over 8 years in a strategic advisory capacity. The transaction closed on April 7, 2017.

Discussing the transaction, Aecus Managing Director Rick Simmonds commented, “We are really excited by this – joining The Hackett Group represents a fantastic move forward for Aecus. The strength of The Hackett Group’s brand combined with the breadth of complementary services will enable us to serve our clients even more effectively and will provide our people with greater professional opportunities.”

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Robust demand for M&A by corporates and private equity, and strong share price performance in the fourth quarter.

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By  Ramone Param, Associate Director – Market Insights & Buyer Coverage, Equiteq

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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.

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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.

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Kick-starting margin improvement in your consulting firm

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By Jason Parks, Director – Strategic Advisory Services, Equiteq.

Gross margin is an important metric in consulting organizations. It can be the difference between steady growth, and running to keep the lights on. It’s also one of the key metrics potential consulting firm buyers focus on as they look to acquire firms with strong profitability.

We recommend that gross margin should represent 50% of a firm’s revenue. If it’s less than that then you’re unlikely to be generating the funds needed for growth or delivering a net margin that will drive equity value.

The challenge with improving gross margins lies in the fact that they rarely have a singular root cause.

There are three main areas to focus on to improve profitability in a consulting or professional services firm, and they are all intertwined:

  • Increase revenues generated by the business by selling higher value work
  • Improve the leverage structure of the delivery organization (i.e., people, IP, QA)
  • Optimize overheads

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Why giving away parts of your business could accelerate your growth. Seriously!

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By Jason Parks, Director – Strategic Advisory Services, Equiteq.

Equiteq hosted a webinar on why equity incentivizing your key employees can improve equity value. In this blog, we take a look at some of the questions asked by attendees.

  1. I’d like to motivate my Managing Directors, but I’m nervous about giving too much away.

It’s a mistake to simply view equity schemes with key employees as good as giving away your business.  When done correctly, they can help you grow your consulting firm faster, thus increasing your equity value. Think about it: it’s better to own 70% of a $10m business than 100% of $3m company.

Managing shareholder dilution is important, but I would encourage you to first consider how to get your key personnel aligned with the shareholders’ interests and objectives. That starts with having a clear plan in place.

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Global consulting M&A and stock market performance strong in the third quarter

By Ramone Param, Buyer Coverage Associate, Equiteq.

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The Equiteq Consulting M&A Index remains significantly above long-term averages and the Equiteq Consulting Share Price Index achieves a ten-year high.

Global consulting M&A activity, as tracked by the Equiteq Consulting M&A Index, was robust in the third quarter. Deal volumes rose in comparison to both the prior quarter and the third quarter of 2015 with serial acquirers like Dentsu, Accenture and Deloitte continuing to be highly active. Third quarter M&A activity was highlighted by landmark transactions within media and management consulting, as well as the broader IT sector.

The Equiteq Consulting Share Price Index also performed very strongly this quarter, outperforming both the S&P 500 and FTSE 100. The index is now at a ten-year high with particularly strong increases in the management consulting and engineering consulting indices.

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Typical aspirational catalysts for and against value realization

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In our extensive experience of working with thousands of owners over the years, within the universe of owners of consulting firms you will fall into one of four groups when it comes to value realization aspirations:

  1. I’m blissfully ignorant and have not even thought about it!
  2. I will never want to sell because I have alternative business and life goals
  3. I may want to sell, but not sure if, how and when
  4. I have a clear goal to sell

If you fall into another group not mentioned please let us know what it is! Another reality is that you may oscillate between groups, depending on factors of change in your business and life. So let’s explore each group and identify the most common reasons why you may want to move up or down.

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