Home >Business >Buyers research 2014: Key Findings from acquirers of Consulting firms

Buyers research 2014: Key Findings from acquirers of Consulting firms

Date post:16-Aug-2015
Category:
View:43 times
Download:1 times
Share this document with a friend
Transcript:
  1. 1. 1 Buyers Research: Key Findings from acquirers of Consulting firms
  2. 2. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S2 1. Brief introduction to Equiteq 2. Buyers Research Report methodology 3. Key insights Insight 1: Buyer expectations over the next three years Insight 2: Buyers ideal characteristics of consulting firms Insight 3: Where buyers source deals Insight 4: Typical deal structure and earn-out periods Insight 5: Deal opportunity failure rates 4. Key messages and Conclusion 5. Questions & Answers Agenda
  3. 3. Equiteq
  4. 4. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S4 Equiteq is a boutique M&A and strategic advisory firm wholly focused on the consulting sector Our experts provide added value to our clients Equiteq is based inLondon, with hubs in New York and Singapore. We are run by world class investment bankers, corporate finance experts and growth consultants in all three locations Community insights Deal documentation Buyer insight M&A research Unique IP
  5. 5. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S5 We deliver above market returns and attractive deal terms Highlights and Statistics Financiallystableclients Wellpreparedforsale Gettinghighdemandfrombuyers Operationallyrobust Buyerbeliefinthefuture Compellingsynergycase Pricereflectsfuturenotpast The Equity Value Model drives results Sale Profit and value growth story Yr 1 Yr +3Yr 2 Yr +2Yr 3 Yr +1 Past Future PremiumvaluezoneAveragevaluezone Price = x x xDiscounted EBIT multiplier 1 Market Premium 3Equiteq Risk Factor eRF 2 Synergy Premium 4 Equity Growth Wheel Market proposition Intellectual property Sales & profit growth Management quality Client relationships Consultant loyalty Quality of fee income Sales & marketing process
  6. 6. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S6 (Brand/Media Consulting) Acquired Sonaa Equiteq acted as lead advisor to 1HQ on the transaction 2013 (FS Consulting) Sold to Cordium Equiteq and Corbett Keeling advised on sale prep and sale 2014 Equiteq is a global leader in consulting services M&A 8 (Management Consulting) Sold to Chime Communications plc Equiteq and Corbett Keeling advised on sale preparation and sale 2012 (Management Consulting) Sold to Baird Capital Equiteq and Corbett Keeling advised on sale preparation and sale 2013 (Management Consulting) Initial Public Offering Equiteq advised on equity growth and IPO preparation 2012 (Oil and Gas Consulting) Sold to SLR Equiteq advised on sale preparation and sale 2014 (Technology Consulting) Sold to Sagentia Group Equiteq advised on business strategy and equity growth 2013 (Real Estate Advisory) Sold to Navigant Equiteq advised on growth, sale prep and partnered with 7 Mile on the sale 2012 (HR Consulting) Sold to Capita Equiteq advised on growth, sale preparation and sale 2013 (Technology Consulting) Acquired Hexarus Equiteq advised Absoft on target acquisitions 2012 (Management Consulting) Sold to FTI Consulting Equiteq advised on sale preparation and sale 2013 (Management Consulting) Acquired Polestar Group (USA) Equiteq acted as lead advisor on the transaction 2013 (Disputes Advisory) Sold to Parentebeard, USA Equiteq and Paramax advised on sale preparation and sale 2013 (Market Research Consulting) Sold to M-Brain Equiteq advised on sale preparation and sale 2014 (Intn Development Consulting) Sold to AECOM Equiteq advised on sale preparation and sale 2014 (Property Consulting) Sold to EC Harris Equiteq advised on sale preparation and sale 2014 (Engineering Consulting) Acquired E3 Consult Equiteq advised CDM on target acquisitions 2011 (Management Consulting) Sold to Take Solutions Equiteq advised on sale preparation 2011 (Management Consulting) Sold to Sovereign Capital Equiteq and Corbett Keeling advised IMS on sale 2010 (Management Consulting) Sold to BT plc Equiteq advised on growth sale preparation and sale 2008
  7. 7. Methodology
  8. 8. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S8 M&A activity within professional services is very active and growing There is little direct advice available on why and how buyers of consulting firms behave We felt it was important to have a primary view from the buyer perspective We commissioned the following independent research: Overall demand trend Types of consulting firms in demand Deal sourcing preferences Deal structures Reasons that buyers fail to close Equiteq The 2014 Buyers Research Report 2014 Buyers Research Report
  9. 9. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S9 Geographic profile of buyers surveyed Industry sectors of buyers surveyed The buyers interviewed cover a wide range of geographies and sectors within professional services
  10. 10. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S10 Level of buyer contacts surveyed Business type of buyers surveyed The majority of those interviewed operate at a senior level in the head office The directors and senior managers interviewed are responsible for 310 acquisitions of professional service firms in the past three years
  11. 11. Buyers expectations over the next three years
  12. 12. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S12 Source of growth over the next two to three years Are buyers seeing more or less opportunities than in the last year? Buyers see more opportunities for acquisitions, which they have identified as a source of growth for their firm
  13. 13. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S13 Buyers of professional service firms expect a 6%+ increase in deals over the next 3 years Buyers anticipate acquiring an average of 3.3 professional service firms over the next 2-3 years The average buyer acquisition budget is $65M $90M for prolific buyers (5% of prolific buyers cited a budget of $200M or more) $35M for regular buyers Buyers are looking to do more deals We are currently in a strong market for sellers a good time to be thinking about an exit Sellers must be able to demonstrate standalone value and synergy Key Findings What this means for sellers The acquisition appetite reflects favourably on sellers We absolutely want to accelerate our acquisitions both in terms of size and numbers because we are quite cash rich Since the financial crisis, its become more obvious who the good players are and they tend to be a lot more expensive!
  14. 14. Buyers ideal characteristics for consulting firms
  15. 15. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S15 Factors attracting buyers to a consulting firm Factors deterring buyers from acquiring The only factor outside the sellers control is cultural fit with a buyer
  16. 16. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S16 50% buyers are very or extremely interest in acquiring a firm in the US. On average, buyers are interested in firms with revenue $15M to $40M Average size of ideal target Prolific buyers: $32M Regular buyers: $26M Think carefully about building core services rather than diversifying into different markets Clearly articulate your cultural identity - consider the cultural fit between your firm and potential buyers Revenue growth more important than scale Key Findings What this means for sellers Ideal fit is a mix of financials, culture, and offerings Their values have to fit with our own otherwise we would never make it work The deal will fall away very quickly if theres no strategic fit Growth is critical unless we felt it was something we could turn aroundbut we wouldnt want to divert our own managements time
  17. 17. Where buyers source deals
  18. 18. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S18 Where prolific buyers source deals Where regular buyers source deals Prolific buyers are more likely to source a deal through a third party and internal M&A process
  19. 19. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S19 It is not easy to get through the early filtering rounds Even more difficult to initiate a secondary approach to the same buyer It is important to understand each buyers process Key Findings Buyers have different approaches to sourcing deals. It is important to tailor your strategy What this means for sellers Prolific buyers source 42% of their acquisition opportunities via third parties and 38% via their internal M&A team. Even buyers with M&A operations put the intermediary route as the most effective source of deals Regular buyers tend to rely on their existing relationships with acquisition targets as their best deal source Direct approaches are very, very rare. It almost all comes from our own activity or from third parties. Intermediaries definitely helpthey are a sort of filtering process.
  20. 20. Typical deal structures and earn-out periods
  21. 21. W W W. E Q U I T E Q . C O M / G R O W I N G & R E A L I Z I N G E Q U I T Y VA L U E I N C O N S U LT I N G F I R M S21 On what targets do buyers base e
Popular Tags:

Click here to load reader

Reader Image
Embed Size (px)
Recommended