Research finds that market dynamics are driving premium M&A valuations for consulting firm owners
November 30, 2016
Equiteq’s 2016 survey of global buyers of knowledge-intensive services businesses, found that strong acquisition demand coupled with fewer opportunities coming to market is creating increased competition for assets, leading to robust valuations for business owners.
With an average budget for consulting acquisitions of $70m and an expectation to make nearly 4 acquisitions in the next 2-3 years, the research found that strategic buyers have significant propensity to buy.
Private equity respondents, not only show a willingness to pay a higher price but have an interest in Intellectual Property rich consulting businesses and appetite for businesses with a financial services or healthcare sector focus.
This independently conducted research of Management consulting, IT consulting, Media and Marketing, Engineering consulting and HR consulting buyers, found convergence as a key buying trend. Notably, Human resources buyers are looking to acquire in Management consulting and there is convergence in demand between Management consulting, IT consulting and Media buyers as well as across IT consulting and Engineering consulting buyers.
David Jorgenson, CEO at Equiteq, comments “Our key takeaway from the report is that sellers should take advantage of the current conditions. Demand for acquisitions remains very strong, and the momentary slowdown in new opportunities mean that sellers may be able to extract a scarcity premium through a carefully managed sale process.”
Equiteq’s Buyers Research report is available to download for free by clicking here.