Mid-Year Report to end June 2013
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Mid-Year Report
Global Consulting Mergers and Acquisitions
02
Global Consulting Mergers and Acquisitions Mid-Year Report to end June 2013
Mid-Year Report 2013
Equiteq produces a comprehensive annual report on the global M&A market for consulting businesses. This document is a mid-year update and should be read in conjunction with the full report for details and definitions. It can be downloaded from www.equiteq.com/report M A R K E T C O M M E N TA RY
In summary, deal volumes are down, but revenue multiples are holding up. Why this inconsistency? Buyers are more selective in their acquisitions and more diligent in the closing of a deal, thus extending the length of the process. Our market activities show no evidence of a decrease in buyer demand, quite the reverse. The revenue multiple is holding because quality firms are hard to find, but in demand. From a seller’s perspective, if a firm has specialist characteristics, good growth history and a robust future forecast, then it will command a premium price. The 12 month moving average is 8% down, from 204 deals per month at the end of 2012 to 188 at the end of June. This drop is consistent with M&A activity in other industrial sectors and not unique to consulting. Figure 1
Deal Volumes per Month, 12 Month Moving Average, 2005 – H1 2013
350
250 200 150 Number of Deals
100 50
12 Month Moving Average
Apr 13 June 13
Jan 2013
Jul 12
Oct 12
Apr 12
Jan 2012
Jul 11
Oct 11
Apr 11
Jan 2011
Jul 10
Oct 10
Apr 10
Jan 2010
Jul 09
Oct 09
Apr 09
Jan 2009
Jul 08
Oct 08
Apr 08
Jan 2008
Jul 07
Oct 07
Apr 07
Jan 2007
Jul 06
Oct 06
Apr 06
Jan 2006
Jul 05
Oct 05
Apr 05
0
Jan 2005
Deals per month
300
2005 to 2013
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Global Consulting Mergers and Acquisitions Mid-Year Report to end June 2013
Mid-Year Report 2013
M&A Mid-Year Report 2013
The fall is not in just one consulting sector, but consistent across them all when we compare with the first half of 2012. When viewed by region, Europe shows the greatest fall, with North America showing signs of the earlier US economic recovery. Figure 3 Deal Volumes by Region, H1 2012 and H1 2013
Figure 2 Deal Volumes by Sector, H1 2012 and H1 2013 350 300
282
264
266
256 226
200
600
279
500
207 173
150
137 100
Number of Deals
Number Deals
250
315
400
0
2012
IT Services 2013
Media
215 177
0
HR
394
200 100
Engineering
489
300
50
Management Consulting
510
496
39 Europe
North America
Aisia Pacific 2012
2013
Whilst volumes may have softened, indications are that values are maintaining strength, with an 11% rise in the revenue multiple across all sectors.
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25
Africa
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32
28
South America
04
Global Consulting Mergers and Acquisitions Mid-Year Report to end June 2013
Mid-Year Report 2013
M&A Mid-Year Report 2013
Figure 4 Revenue Multiples, all Sectors, 12 Month Rolling Median, 2009 – H1 2013 1.1
Revenue Multiple
1 0.9 0.8 0.7 0.6 0.5
May 13 June 13
Jan 2013
March 13
Nov 12
July 12
Sept 12
May 12
Jan 2012
March 12
Nov 11
July 11
Sept 11
May 11
Jan 2011
March 11
Nov 10
July 10
Sept 10
May 10
Jan 2010
March 10
Nov 09
July 09
Sept 09
May 09
Jan 2009
March 09
0.4
2009 to 2013
The deal value rise is reflected in the value of shares in listed consulting businesses, where we see an increase in valuations as a multiple of revenue in all sectors other than engineering. Figure 5 Share Price Revenue Multiples by Sector 1.2
Revenue Multiple
1.0
1.09 1.13 0.94
0.8
0.82
0.6
0.48 0.44
0.4
0.50
0.58
0.65 0.66
0.2
2012
0
2013 Management Consulting
Engineering
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HR
IT Services
Media
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05
Global Consulting Mergers and Acquisitions Mid-Year Report to end June 2013
Target Issuer
Target Description
Buyers Investors
Deal Value $m
Revenue Multiple
Clear Task, Inc. (USA)
Engages in implementing and customizing Salesforce.com products
Perficient Inc. (USA)
12
1.45
Energy Information Centre Ltd (UK)
Provides energy market information and consultancy services
Utilitywise Plc (UK)
28
2.58
Sempla Srl (Italy)
Offers information technology consulting, program management, interactive design, process and system design, and outsourcing services
GFT Holding Italy S.r.l. (Italy)
29
0.54
Morse Spain SL and Morse Computer Group Limited and 2e2 Guernsey Limited and Business in Netherlands (Ireland)
Provide ICT lifecycle services on premises in the cloud, hosted, as a managed service, and as a hybrid
Logicalis Group Limited (UK)
31
0.21
Amaze Limited (UK)
Operates as a digital marketing and technology company
St Ives Marketing Services Limited (UK)
37
1.45
Branded3 Search Limited (UK)
Operates as an integrated digital marketing and search engine optimization (SEO) agency
St Ives plc (UK)
38
6.10
CapitalStream, Inc. (USA)
Provides software and consulting services in the United States
Linedata Services SA (France)
45
1.50
FishNet Consulting, Inc. (USA)
Provides information security solutions for businesses in the United States
Investcorp Bank B.S.C. (Bahrain)
200
JACAM Chemicals, LLC (USA)
A testing laboratory, offers research services to diagnose field problems for petrochemical industry
Canadian Energy Services & Technology Corp. (Canada)
240
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2.47
Mid-Year Report 2013
Sample deals completed in H1 2013
06
Global Consulting Mergers and Acquisitions Mid-Year Report to end June 2013
Target Issuer
Target Description
Buyers Investors
Deal Value $m
Revenue Multiple
CSS Corporation (USA)
An information and communications technology company
Partners Group (Switzerland)
270
1.3
Acquity Group Limited (Hong Kong)
Provides brand e-commerce and digital marketing services in the United States
Accenture Holdings B.V. (Netherlands)
316
2.03
RepconStrickland, Inc. (USA)
Provides recurring turnaround and specialty services to refinery, and other process industries
EMCOR Group Inc. (USA)
455
1.14
Intelligence, Ltd. (Japan)
Provides human resource services in Japan and internationally
Temp Holdings Co., Ltd. (Japan)
745
0.97
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Mid-Year Report 2013
Sample deals completed in H1 2013
07
The Global Consulting Mergers & Acquisitions - Interim Report, June 2013
Further Resources
The Global Consulting Mergers & Acquisition Report 2013 This market trend report is for people involved in the running of a consultancy business and looking to sell and/or acquire. Download for free at www.equiteq.com/Report
100 Tips for Consulting Firms to Accelerate Profit and Value Growth This guide contains practical tips to build sustainable growth in cash flow, profit and equity value. Download for free at www.equiteq.com/100ConsultingGrowthTips
Equity Growth Accelerator Create a clear direction for your firm with a prioritised and quantified growth plan using the ‘8 levers of Equity Value’ and 80 best practice operating metrics. Download the briefing pack at www.equiteq.com/EGA
Valuation and Market Risk Assessment
100 Tips for Consulting firms to accelerate profit and value growth
Read Immediately and pass on to your colleagues
Growing & realising equity value in consulting firms
Get a robust valuation of your firm and a thorough risk assessment before you put your business up for sale. It enables you to plug the gaps before you enter buyer due diligence and produces a substantiated valuation that will not be undermined. Find out more at www.equiteq.com/Valuation
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Mid-Year Report
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