The Human Resources Global M&A Report 2019 · 2019-10-25 · 4 The Human Resources Global M&A...

© Equiteq Advisors Ltd. 2019

Growing equity, realizing value

The Human Resources Global M&A Report 2019Market trends and key transactional insights for owners of human resources firms

Management Consulting

Media Agencies

IT Services

Human Resources

Engineering Consulting

Antonio Bonet, International development consulting.

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3© Equiteq Advisors Ltd. 2019

Contents

Contents

Foreword 4

Human Resources 7

Key findings 7

Overview of M&A activity 8

Regional review 11

Overview of equity market performance 12

Valuation multiples and trends 13

Buyer trends 15

Selected transactions 16

Key considerations 19

Appendix 22

About Equiteq 22

Key definitions 23

Equiteq market intelligence and data sources 24

Further resources 24

Disclaimers and important information 25

The Human Resources Global M&A Report 20194

Equiteq is pleased to present the results of our annual review of M&A and equity market trends across the human resources industry.

In 2018, deal volumes and average deal sizes rose strongly as cash-rich buyers acquired new capabilities. Continued falls in unemployment, a shortage of talent in a variety of industries and disruption to the traditional human resources function were major drivers of growth and deal flow in the industry.

Demands on human resources professionals is being driven by a scarcity of skills, particularly in knowledge-led industries like technology, engineering and consulting. This dynamic is coupled with changing employee expectations through the Fourth Industrial Revolution. The needs of employees are shifting with the rapid adoption of new digital technologies, along with changing workforce demographics in a constrained talent market. These trends are changing how employees work and what they demand from their career.

We are also observing strong M&A activity at the intersection of human resources and technology with the acceleration of digital disruption to the human resources function. At the convergence of human resources and technology we are observing notable demand for HCM digital transformation offerings, as well as IT staffing solutions and people analytics capabilities. There is growth and consolidation of multi-process outsourcing providers that offer some of the latest digital solutions and can help businesses of various sizes grow and streamline their operations.

Deal flow across the industry is being supported by an abundance of capital among strategic buyers, along with strong levels of dry powder and robust fund raising among active private equity investors. The current low interest rate environment is maintaining pressure on strategic and financial buyers to put their cash to work on new investments including M&A at premium valuations.

Foreword

Human resources businesses that are at the forefront of developments shaping the Fourth Industrial Revolution need to be rich in knowledge that remains cutting-edge from a culture of constant innovation, which includes a deep understanding of the latest digital technologies that are fusing to enable many of the latest disruptions to the human resources function. There is an unparalleled opportunity for pioneering business owners and entrepreneurs to create value and make profitable exits within the disruption zone of the knowledge economy.

We hope that this latest edition of The Human Resources Global M&A Report gives you a taste of Equiteq’s deep insights into deal activity within this space. If you would like to have a chat about your current sale journey as a business owner or acquisition strategy as an acquirer, please get in touch.

David Jorgenson, CEO Equiteq

Foreword


John and Helen Sandom, Brand agency.

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6 Human Resources The Human Resources Global M&A Report 2019

John Sandom, Brand agency.

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7Human Resources© Equiteq Advisors Ltd. 2019

Human Resources

2009 20142010 20152011 20162012 20172013 2018

0.3x

0.6x3.6x

7.8x

1 Jan 2009 100

31 Dec 2018 285

2009 20142010 20152011 20162012 20172013 2018

0.4x

8.4x7.3x

0.4x

262

deal

s

Deal volumes Revenue valuation multipleEBITDA valuation multiple

Share price index Revenue valuation multipleEBITDA valuation multiple

Key findings

13%6%

FTSE 100 return 2018

16%

EHRSPI return 2018

4%

EKESPI return 2018

185%

EHRSPI return 10 years

151%

EKESPI return 10 years

S&P 500 return 2018

No. of transactions 2018 vs. 2017

Average deal values

2018 vs. 2017

39%21%

Average deal size 2018

of buyers are financial buyers

Median deal size 2018

of buyers are listed strategic buyers

$19.8m

10%

$11.5m

24%


Overview of M&A activity

Talent shortages across industries are driving demand for staffing and recruitment companies.

In 2018, deal volumes and average deal sizes rose strongly as cash-rich buyers acquired new capabilities to meet rising client demand. A key driver for this was declining unemployment across developed economies, which is creating a variety of human resources (HR) issues for firms dealing with a scarcity of talent. There was notably strong demand for staffing and recruitment businesses that are benefiting from the current market dynamics. This demand was strong among cash-rich strategic buyers and private equity that increased their participation in M&A within the space.

Artech Information Systems acquired Talent & Technology Solutions business unit ("TTS") of CDI Corporation. Artech is a staffing business and acquired a unit which comprises 2,500 people that offer IT and engineering talent sourcing services and related technology solutions.

OMERS Private Equity acquired Alexander Mann Solutions, a UK-based provider of workforce solutions meeting its clients’ permanent, contingent and internal mobility requirements through a range of outsourcing and consulting services. OMERS acquired the business from private equity New Mountain Capital.

Harvey Nash Group was acquired by DBAY Advisors Limited. The investment will enable Harvey Nash to expand its IT staffing, executive recruitment and IT outsourcing services.

Mercer acquired Mettl, an Indian cloud-based technology and data sciences-driven talent assessments business that helps companies maximize human potential by measuring talent through assessments conducted in a SaaS platform.

Vista Equity Partners acquired iCIMS, a provider of enterprise recruitment technology, which is used by 4,000 employers around the world. Vista Equity is a private equity firm that acquired the business from Susquehanna Growth Equity.

Human resources digital transformation continues to be a hot space for deals.

Digital advancements are continuing to disrupt the industry from both the perspective of how HR consulting firms deliver their services and with respect to enabling HR digital transformations within their client’s organizations. In 2018, there was particularly strong demand for new technology systems, cloud-based tools, people analytics and social media solutions that can enable improved insights into talent or enhance the employee experience. Artificial intelligence is being used to streamline functions and improve efficiencies. These elements are of interest to private equity investors, as well as many strategic buyers.

© Equiteq Advisors Ltd. 2019 9Human Resources

Strong deal flow will be underpinned by substantial levels of cash available for M&A and continued talent shortages in high growth industries. There will be continued rises in demand for innovative technology-enabled recruitment, training and retention solutions. We expect strong growth to occur in advanced people analytics and machine learning solutions.

Paychex acquired Oasis Outsourcing, the US’ largest private professional employer organization (PEO) offering a range of HR outsourcing services. The business services 8,400 clients across the US with a range of HR solutions.

H.I.G. Capital acquired Conduent’s US-based HR consulting and actuarial business, which was formerly known as Buck Consultants. The divestment includes Conduent's HR consulting and outsourcing operations in Canada and the UK.

The growing multi-process human resources outsourcing market saw consolidation.

HR outsourcing continues to grow as enterprises of various sizes look for external specialized partners to help them grow and streamline processes. In 2018, many market participants saw strong growth coming from small to medium sizes enterprise clients. Businesses are increasingly looking to partner with outsourcers that can offer their firm with next generation HR processes, which leverage the latest technologies. This enables them to effectively alleviate administrative burdens to focus on core business issues. The need for a specialized partner is becoming increasingly important in the new digital age and against a backdrop of skill shortages across key disciplines.


Figure 1 Human resources M&A activity, annually (2009 to 2018)

Note: Bubble size reflects comparative average deal size for the respective year.

2009 20142010 20152011 20162012 20172013 2018

200

100

300

0

400

Num

ber

of d

eals

Industry trends

Buyers in adjacent industries may be willing to pay a strategic premium for an acquisition that enables expansion into a new space. See Consideration 3 in the back for our perspectives on how to consider buyers across adjacent industries.

Leadership consulting

Digital HR

Areas of industry convergence

IT servicesStrategy consulting

Operational consulting

Software solutions

HR consulting

Hot spaces

The optimum size of a transaction will vary among buyers and the specific opportunity that they are considering. See Consideration 1 in the back of the report for our perspectives on the relationship between business size and acquisition appetite.

In addition to running a competitive well-negotiated sale process, there are plenty of steps that owners can take to reduce risk in the eyes of a buyer which can make a material difference to their target deal structures. See Consideration 2 in the back for our perspectives on the factors that influence deal structures.

People analytics

Employee experience

IT staffing

Leadership consulting

Talent management

HR digital transformation


Regional reviewGrowth in M&A across North America and Europe. Strong cross-border deal flow in APAC.

Figure 2 Regional review

50% 38%

7%

3%2%

High-profile cross-border acquisitions across the knowledge economy are common and enable foreign buyers to penetrate new markets, gain new clients and grow revenues with existing global accounts. See Consideration 4 in the back for our perspectives on incorporating international buyers into your sale process.

North America

% Cross-border deals: 7%

130 deals (up 22%)

$14.3m Median deal

size

Rest of the World


4 deals (up 33%)

$29.3m Median deal

size

Australia & NZ


7 deals [flat)

$8.6m Median deal

size

Europe


103 deals (up 36%)

$10.5m Median deal

size

Asia Pacific (excl. Australia & NZ)


18 deals (down 25%)

$4.0m Median deal

size

Cross-border deals accounted for 15% of all deals


Overview of equity market performance The Equiteq Human Resources Share Price Index dipped, but there were large variations in performance among constituent players.

Figure 3 Equiteq Human Resources Share Price Index

Figure 4 Equiteq Human Resources Share Price Index (2009 to 2018)

Human Resources

Human Resources

S&P 500

S&P 500

Note: The Equiteq Human Resources Share Price Index is the only published share price index which tracks the listed companies within the human resources industry. You will be able to receive further information on the index and its performance by joining Equiteq Edge at equiteq.com/equiteq-edge. The index is continually revised to consider new listed companies and to remove businesses that are no longer relevant in each quarter.

145

135

125

115

105

95

85

75

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

100

150

350

250

300

200

50

0

http://www.equiteq.com/equiteq-edge


Valuation multiples and trendsEBITDA valuation multiples for M&A transactions rose, but there was a dip in listed company valuations.

When reviewing this section, please note the issues of interpretation, along with the wide range of company and deal specific factors that influence the valuation of a knowledge-intensive services business. The figures in this report are primarily a comparative guide and should not be used by sellers or buyers to value a business, for which we recommend you obtain independent financial advice.

See Consideration 5 in the back on the key considerations when interpreting valuation metrics.

As their quoted valuation metrics and cash balances rise, so does competition for assets from listed buyers, who are looking for new avenues of growth and are able to make earnings accretive acquisitions by paying a discount to their premium earnings ratio. See Consideration 6 in the back for our perspectives on what rising share prices implies for listed buyers.

Figure 5 Enterprise Value (EV) as a multiple of Last Full Year (LFY) unadjusted revenue and EBITDA

M&A transactions Listed consultants Interquartile range Median

Note: The interquartile range is a measure of variability, based on showing the range of data in ascending order from the 25th percentile (Q1, 1st quartile) result to the 75th percentile (Q3, 3rd quartile) result.

Q1 Q1Q3 Q3

LFY Revenue (x) LFY EBITDA (x)

0.4x 8.4x

0.6x 7.8x

0.2x 7.0x0.4x 8.6x

0.3x 4.8x1.1x 11.8x


Figure 7 Valuation metrics, 2009 to 2018 (listed companies)

EBITDA multiple (LHS) Revenue multiple (RHS)

Figure 6 Valuation metrics, 2009 to 2018 (M&A transactions)

EBITDA multiple (LHS) Revenue multiple (RHS)

LFY

EBIT

DA

mul

tipl

e (x

)

LFY

Rev

enue

mul

tipl

e (x

)

14.0 1.4

1.0

1.2

0.8

12.0

0.6

10.0

0.4

8.0

0.2

6.0

4.0

2.0

0.0 0.02009 201820172016201520142013201220112010

LFY

EBIT

DA

mul

tipl

e (x

)

LFY

Rev

enue

mul

tipl

e (x

)

9.0

8.0

7.0

0.8

6.0

0.7

5.0

0.6

4.0

0.5

0.4

0.3

0.2

0.1

3.0

2.0

1.0

0.0 0.02009 201820172016201520142013201220112010


Buyer trends Prolific buyers consist of human resources consulting, risk management and staffing businesses.

of all deals were by financial buyers

10% 24% of all dealswere by listed buyers

Selected serial strategic buyers

Gallagher - Insurance, risk management, employee benefits and consulting firm.

Arthur J. Gallagher (Gallagher) continues to be a highly active acquirer across its core insurance industry and adjacent services. According to the buyer’s fourth quarter financial results, the buyer completed 48 tuck-in acquisitions with estimated annualized revenue of $340 million in FY2018. Its acquisition of Dicentra Pension Services added pension consulting services in the US. The purchase of Super-Advice Corporate Services added corporate advisory and employee benefits services in Australia. Gallagher notes a strong pipeline for acquisitions as we commence 2019. The buyer highlights that it looks for partners that demonstrate knowledge leadership in their practice, a commitment to client service and ethical conduct.

Hub International - Insurance broker providing employee benefits and risk management services.

Hub International continued its strong deal flow in 2018, acquiring insurance agencies and adjacent businesses. Notably, the business acquired a number of Canadian employee benefits brokerages over the year. Hub received an undisclosed amount of development capital from Atlas Partners in October 2018, which will be used to support its growth strategies. Hellman & Friedman remains the largest investor in the buyer and the company’s management team also hold significant equity.

Mercer - Human resources consulting firm that is a subsidiary of Marsh & McLennan.

Mercer acquired five businesses in 2018, three of which were focused on extending its investment consulting services. The buyer acquired everBe, a French Workday implementation and advisory business focused on cloud technologies. Another notable deal was of Mettl, a provider of cloud-based technology and data sciences-driven talent assessments. Following its parent company’s acquisition of insurance competitor Jardine Lloyd Thompson, Mercer made a number of leadership appointments from the business.

Segal Group - Strategic human resources and benefits consulting firm.

Segal Group has grown via selective acquisitions into a provider of a range of consulting and insurance brokerage services across the US. In 2018, the business acquired two business. Its acquisition of Touchstone Consulting Group expanded its employee benefits consulting offering that will form part of its Sibson Consulting business unit. The purchase of The Singer Group expands Segal Group’s HR and organizational development consulting services and will form part of its public sector focused Segal Waters Consulting.

Staffing 360 Solutions - International recruitment and staffing agency.

Staffing 360 Solutions believes that the staffing industry has opportunities for accretive acquisitions that will drive its annual revenues to $500m. Its buy-and-build strategy is aimed at acquisitions in the UK and US with a focus on finance and accounting, administrative, engineering, IT and light industrial staffing. In 2018, the buyer acquired two businesses. Its purchase of UK-based Clement May built recruitment skills in the region. The business also acquired custom staffing services through its acquisition of US-based Key Resources.


Selected transactions

Date Target Key services of target Buyer Deal value

EV / LFY revenue (x)

Dec-18 On Time Staffing Workforce management and temporary staffing services Eclipse Advantage - -

Nov-18

John R. Sharry (dba Group Benefits Strategies)

Health care consulting Arthur J. Gallagher - -

Nov-18 Oasis OutsourcingProfessional Employer Organization; HR outsourcing services

Paychex $1,200m -

Oct-18CDI (Talent & Technology Solutions)

Engineering, IT, and staffing solutions

Artech Information Systems - -

Oct-18 MettlCloud-based technology and data sciences-driven talent assessments

Mercer - -

Oct-18Richter International Consulting

International benefits broker Arthur J. Gallagher - -

Oct-18 Wellington Associates

Property/casualty and employee benefits coverages and services Arthur J. Gallagher - -

Sep-18 Jardine Lloyd Thompson (JLT)

Insurance, reinsurance and employee benefits advice, brokerage

Marsh & McLennan £4,271m -

Sep-18 Kier Pensions Third-party pension administration services XPS Pensions Group £3.5m -

Sep-18 Super-Advice entities

Employee benefit consulting and corporate advisory Arthur J. Gallagher - -

Aug-18 Harvey Nash Professional recruitment and IT outsourcing DBAY £123m 0.1

Aug-18 Key Resources Distribution and supply chain personnel

Staffing 360 Solutions $12.2m 0.3

Aug-18Leystone Insurance & Financial

Employee benefits and retirement consulting Arthur J. Gallagher - -

Aug-18Pavilion (Wealth management business)

Global investment services Mercer - -

Aug-18 Summit Investment consulting Mercer - -

Jul-18 3Ci Technology staffing and consulting

MAU Workforce Solutions - -

Jul-18 Clement May IT recruitment services Staffing 360 Solutions £2.4m -

Jul-18 Compass Clinical Consulting Healthcare consulting TiER1 Performance

Solutions - -

Jul-18 Paramount Staffing Industrial staffing Proman Group - -

Jun-18 Avantek Producer of highly customized financial and benefit reports Arthur J. Gallagher - -


Date Target Key services of target Buyer Deal value

EV / LFY revenue (x)

Jun-18 Cedar Consulting HR transformation Version 1 - -

Jun-18 Dartmouth Partners Recruitment consulting Literacy Capital -

Jun-18 Finergy Solutions Superannuation education and advice Arthur J. Gallagher - -

Jun-18 PDS Tech Engineering and R&D consulting Akka - -

May-18 Alexander Mann Solutions Talent acquisition solutions OMERS Private Equity £820m 1.0

Apr-18 Clark Thomson Community insurance broker Jelf £28.9m -

Apr-18

Conduent (U.S.-based HR consulting and actuarial business)

HR consulting and outsourcing services H.I.G. Capital - -

Apr-18 ES3 Insurance Services

Employee benefits and pensions consulting Hub International - -

Apr-18 The Reaves Agency Employee benefit solutions OneDigital Health and

Benefits - -

Mar-18 GMS Insurance Employee benefit consulting Hub International - -

Mar-18 The Singer Group HR and organizational development consulting The Segal Group - -

Feb-18Diversified Insurance Solutions

Insurance, benefits and risk management

Associated Financial Group (Associated Banc-Corp)

- -

Feb-18 Pointbreak Consulting Group

Employee benefits and pension consulting Hub International - -

Feb-18 The Survey Group Compensation surveys and consulting

Insight Performance (OneDigital Health and Benefits)

- -

Feb-18 Wilson Albers & Company

Employee benefits, retirement, and human resources services Alera Group - -

Feb-18 Xcellero Leadership

Leadership and organizational development Novo Group - -

Jan-18 Marsh Consulting Group Health and benefits consulting Foster & Foster - -

Jan-18 The Daniels Group Employee benefits consulting and broker Arthur J. Gallagher - -

Jan-18 Touchstone Consulting Employee benefits consulting Segal Group - -

Note: The date of the deal relates to the announced date. Deals outlined are those announced and not necessarily completed in 2018.

Equiteq advised

The Human Resources Global M&A Report 201918 Segment Reviews | Management Consulting

Marc Jantzen, Performance Improvement.

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19© Equiteq Advisors Ltd. 2019 Considerations

Key considerations

Consideration 1: The relationship between business size and acquisition appetite

Although landmark deals grab headlines, there is notable deal flow at smaller transaction sizes, as highlighted by the large difference between mean and median deal sizes across segments each year. Nevertheless, we typically find that serial buyers do not focus on smaller deals below certain revenue thresholds, unless they offer exceptional synergy or intellectual property or are part of a team hire with limited cash consideration being paid. Buyers may also pay a premium for larger businesses with an established brand, attractive client relationships, embedded intellectual property and the investment in infrastructure that will enable future growth. The importance of revenue size to many buyers, highlights the benefits of setting a clear growth plan and a target scale at exit.

Consideration 2: The factors that can influence a deal structure

A knowledge-intensive services acquisition can be structured in a variety of ways, but typically involves some mixture of upfront cash element, fixed deferred cash and an earn-out. The earn-out offers additional compensation in the future if the business achieves certain financial goals. There are many factors which influence deal structure, however those features which tend to drive more significant earn-out elements include:

• Owners’ desire to share in synergy benefitand access to the buyers’ clients;

• Buyer’s perceived risk of acquisition,including dependency on the owner and abilityto retain talent;

The following considerations relate to some of the strategic issues that business owners on a sale journey should consider while reviewing the data analysis and findings within the report.

• Nature of the buyer;

• Nature of the sale process; and

• Owner awareness and ability to negotiateon deal structuring options.

There are a variety of steps that owners can take to reduce transaction risk for a buyer, which can improve target deal structures. Furthermore, we find that deal structures can be improved upon in well-managed competitive negotiations.

Consideration 3: Considering buyers across adjacent industries

Convergence is a continuing trend in both operational and M&A growth for large players across the knowledge economy. Buyers in adjacent segments are often willing to pay premium prices that reflect the considerable synergy opportunity of cross-selling a broader set of complementary services among existing and new clients. Sellers should be aware that the highest price could therefore come from a strategic buyer outside of your core industry. Considering appropriate buyers across adjacent segments and appropriately positioning the synergy opportunity with these buyers is crucial to effectively managing a broad sale process.

Consideration 4: Considering international buyers

Acquiring in desirable regions enables strategic buyers to gain quick access to lucrative markets, brands, intellectual property, local market knowledge, new clients and specific local expertise. As a result of this, overseas buyers may pay a premium to gain a market foothold.

It is therefore important to consider a range of appropriate international buyers in a broad sale process. To attract these buyers to the local market, it is important to demonstrate the attractiveness of the market and its position. It is also key to articulate why the acquisition will be less risky and deliver a faster return than opening an office and recruiting local talent.

The Human Resources Global M&A Report 201920 Considerations

Consideration 5: Key considerations when interpreting valuation metrics

The typical metrics used by a buyer to value a knowledge-intensive services business are Enterprise Value (EV) as a multiple of a seller’s last full year (LFY) of revenue and EV as a multiple of a seller’s LFY of EBITDA (referred to as “valuation multiples”). A buyer will typically consider reported valuation multiples on comparable M&A transactions, although only a small proportion of deals in the knowledge economy report revenue multiples and an even lower proportion report EBITDA multiples.

On larger transactions, buyers may also consider the valuation multiples of large global listed companies that are tracked within the Equiteq Human Resources Share Price Index. Their valuation multiples are quoted publicly on a stock exchange at a given point in time and are therefore useful benchmarks of valuation based on current market sentiment.

It should be noted that to directly compare publicly quoted valuation multiples with transaction multiples requires the application of a strategic control premium and a liquidity discount, which can vary between company and equity market. Furthermore, valuation multiples for both transactions and listed companies typically relate to historic unadjusted financials. These issues with interpretation are compounded for EBITDA valuation metrics, where companies may under-report profits and not account for adjustments with respect to one-off items and equity components within salary expenses.

Given these issues of interpretation, along with the wide range of company and deal specific factors that influence the valuation of a knowledge-intensive services business, valuation multiples will vary widely. The figures in this report are therefore primarily a comparative guide and to show trends year on year. They should not be used by sellers or buyers to value a business, for which we recommend you obtain independent financial advice.

Consideration 6: What rising share prices means for listed buyers

As the publicly quoted valuation multiples and cash balances of listed buyers rise, so does competition for assets from this buyer group. Listed companies that are growing will be looking for new avenues of growth to meet shareholder expectations, and acquisitions quickly enables them to achieve this.

Earnings per share is a key metric that is tracked by public company shareholders to consider the dividend potential of the business. Earnings accretive acquisitions are often a key target of listed businesses. An accretive acquisition will increase a listed buyer’s earnings per share and is expected to quickly be achieved by paying a forward EBITDA multiple that is at a discount to a buyer’s own quoted

EBITDA ratio. Therefore, premium and rising publicly quoted earnings ratios offers a buyer more scope to make earnings accretive acquisitions at higher prices.

With respect to deal structuring, some of these buyers will also be able to offer equity components to target companies. Listed equity is increasingly valuable as share prices rise and can be used to create potentially more compelling offers over private acquirers.

Consideration 7: Key considerations when selling to an accounting firm

Professional services buyers are expanding their “Channel 2” (non-audit) advisory services, which are a high growth segment for this buyer group and offer significant cross-selling opportunities with their core audit client base. This buyer group is acquisitive and transaction structures typically involve non-cash components such as partnership in the accounting network. Buyers tend to operate on a territory model so have an aversion to acquiring diversely spread multi-territory businesses.

Consideration 8: Key considerations when selling to a private equity firm

Private equity (PE) buyers differ from strategic buyers, in that the former acquire strictly to realize a cash return on their invested equity. Strategic buyers typically acquire to realize long-term strategic value. As a result, PE buyers will look for specific traits in an acquisition and selling to a PE buyer will have different implications as compared with selling to a trade buyer.

To make a return on their invested equity, PE buyers look for a company that has value enhancement potential and acquire it at a favorable price with financing. With knowledge-intensive services businesses, they are attracted by the relatively high profit margins compared to other industries, the potential for high growth if a business is in a hot space and the barriers to entry that can be maintained if proprietary expertise is retained and leveraged through intellectual property.


Nigel Povah, Behavioural assessment & development consulting.

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The Human Resources Global M&A Report 201922 Appendix

Appendix

Equiteq is a global leader in providing strategic advisory and merger & acquisition services to owners of IP-rich technology and services businesses

There are unique challenges to value growth and equity realization for shareholders and investors in the knowledge economy. Equiteq helps owners transform equity value and then realize maximum value through global sale processes.

Sold to

Equiteq advised on the transaction

Accenture

OrbiumBusiness & Technology

Consulting

Sold to


A.T. Kearney

CervelloData Analytics Consulting

Sold to


ABeam Consulting

LightStream AnalyticsData Analytics

Merged with


gobeyond

OEE ConsultingCustomer Journey

Specialist

Sold a majority stake to


Decision Inc.

CoppermanSAP BPC Specialist

Sold to


PA Consulting

Essential DesignInnovation Strategy

Merged with


YCP Holdings

SolidianceManagement Consulting

Sold to

DXC Technology

System PartnersSalesforce Consulting


Merged with


The Illuminera Group

DBM ConsultantsMarket Research

Joined


Deloitte

MexiaMicrosoft Integration

Consulting

MBO backed by


FPE Capital

The NAV PeopleMicrosoft Dynamics NAV

Partner

Received investment from

Literacy Capital plc

Dartmouth PartnersRecruitment Consulting


Selected recent Equiteq transactions:

Contact us

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Email: [email protected]: equiteq.com

About Equiteq

© Equiteq Advisors Ltd. 2019 23

Key definitions

Equiteq segments the knowledge economy into five key segments, which span a broad array of knowledge-intensive services. These sub-sectors are defined further below:

Appendix

For the purposes of this report we have broken down buyers into four groups, defined further below:

Management ConsultingFirms engaged in strategic or operationally focused business advisory services.

IT ServicesFirms focused on IT architecture, IT strategy, IT implementation or IT maintenance.

Media Agencies Firms in this space cover all the main disciplines relating to the advertising and marketing process.

Engineering ConsultingFirms involved in professional services relating to engineering, design and construction.

Human ResourcesFirms engaged in human capital management or related technology consulting, employee benefit services, leadership consulting, training and recruitment.

Private equity or financial buyersInvestment firms investing private capital into businesses, which are typically held and exited after a hold-period.

Strategic or corporate buyers Non-private equity investors who have existing businesses which will typically make acquisitions that form part of their existing operations.

Serial buyers Buyers that have made multiple knowledge economy acquisitions over the last three years.

Listed buyers Buyers whose equity is publicly traded on a stock exchange.

The Human Resources Global M&A Report 201924 Appendix

Join Equiteq Edge, a source of information, advice and insight to help you prepare for sale and sell your knowledge-intensive services firm. Equiteq Edge gives you access to the findings of unique research conducted amongst buyers of knowledge-intensive services firms from around the world, insight from those who have sold their businesses and other expert advice.

Join Equiteq Edge at equiteq.com/equiteq-edge

Further resources

Equiteq market intelligence and data sources

This report has been compiled by Equiteq’s dedicated market intelligence team with unique insights from Ramone Param, the firm’s thought leadership director. The report utilizes multiple data sources including proprietary newsfeeds, press releases, various third-party information sources and data services. Additionally, our daily activities in the M&A marketplace with buyers and sellers provide insights into emerging trends and informs our research report’s point of view.

It is important to note that financial data, including valuation multiples, are derived from various sources including S&P Capital IQ and PitchBook information databases, combined with findings from our daily activities in the market with buyers and sellers that we utilize on an anonymized basis. M&A volumes (the number of transactions completed) for the latest period being analyzed are estimated based on reported deal volumes and the application of an adjustment factor to account for transactions completed, but not immediately captured in our subscription databases. Due to refinements in data, methodologies and market definitions, historic figures may vary between our reports.

http://www.equiteq.com/equiteq-edge

© Equiteq Advisors Ltd. 2019 25Appendix

Disclaimers and important information

Equiteq is an M&A and strategic advisory firm that seeks to provide you, the owners of knowledge-intensive services businesses, with the best possible information, advice and experience to help you make decisions about selling your firm and preparing it for sale. What follows is a legal disclaimer to ensure that you are aware that if you act on this advice, Equiteq cannot be held liable for the results of your decisions. The information is not intended to provide tax, legal or investment advice. We make no representations or warranties in regard to the contents of or materials provided in this report, and exclude all representations, conditions and warranties, express or implied arising by operation of law or otherwise, to the extent that these may not be excluded by law.

Any reproduction or distribution of this document, as a whole or in part, or the disclosure of the contents hereof, without the prior written consent of Equiteq, is prohibited. All recipients agree they will keep confidential all information contained herein and not already in the public domain.

Past performance does not guarantee future results. Future returns will likely vary. Certain information contained herein concerning performance data or economic or industry trends is estimated or provided by or based on or derived from information from third party sources. Equiteq believes that such information is accurate and that the sources from which it has been obtained are reliable. Equiteq cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions upon which such information is based. We shall not be liable in contract, tort (including negligence) or otherwise for indirect, special, incidental, punitive or consequential losses or damages, or loss of profits, revenue, goodwill or anticipated savings, or for any financial loss whatsoever, regardless of whether any such loss or damage would arise in the ordinary course of events or otherwise, or is reasonably foreseeable or is otherwise in the contemplation of the parties in connection with this report. No liability is excluded to the extent such liability may not be excluded or limited by law.

Note 1: The returns of the S&P 500 and FTSE 100 indices have been provided in this presentation as appropriate benchmarks for comparison to the Equiteq Human Resources Share Price Index and its constituent segment indices. The S&P 500 represents the Standard & Poor’s 500 Index; The FTSE 100 represents the Financial Times Stock Exchange 100 Index. The FTSE 100 represents the 100 largest companies listed on the London Stock Exchange, by market capitalization. We believe it is relevant to compare the Equiteq Human Resources Share Price Index with broad U.S. and international public equities. These indices each focus on large capitalization public equities and can be viewed as proxies for the market overall. Notwithstanding the foregoing, there will not necessarily be a correlation between the performance of the Equiteq Human Resources Share Price Index, on the one hand, and either of these indices, on the other hand. Investments cannot be made directly in indices and such indices may re-invest dividends and income.

Publication date: 25 March 2019


© 2019 Equiteq Advisors Ltd. March 2019

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The Human Resources Global M&A Report 2019 · 2019-10-25 · 4 The Human Resources Global M&A...

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