The document summarizes Equiteq's 2017 Global Consulting M&A Report. It found that M&A activity and average deal values in the consulting industry reached 10-year highs in 2016. Demand remains strong across industry segments for highly sought capabilities. Both strategic and financial buyers are actively acquiring companies, and cross-border deal activity remains prominent. The outlook for continued M&A activity in the consulting industry over the next year is positive.

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Growing equity, realizing value
The Global Consulting M&A Report

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Equiteq is the leading M&A firm focused exclusively on
the consulting and knowledge sectors
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What we do for our clients
Equity value realization
Sale to a Strategic Buyer or
Financial Investor
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Value creation and sale preparation
Between 1 and 3 years ahead of
a desired transaction
Prepare
400+
Clients
Why we’re different
• Deep domain expertise in the Consulting sector
• Add value and engage at any stage in the exit
destination journey
• Unique blend of consulting, corporate finance and
investment banking skills
NEW YORK
LONDON
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RE
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Established in 2004
Global presence
Clients in 27+ countries
Widely published in industry media
Global industry credentials

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The Global Consulting M&A Report 2017
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Equiteq's Global Consulting M&A Report is an exclusive annual analysis of M&A and
equity market trends for the knowledge-led services industry.
• 10th consecutive year of the report
• Compilation and analysis of all 2016 deals world-wide
• We analysed firms engaged in knowledge-led services across:
–Management consulting;
–IT services;
–Media agencies;
–Engineering services; and
–Human Resources.
• Compiled using:
–Proprietary news feeds;
–M&A data subscription services;
–Unique intelligence from our daily interaction with buyers and sellers; and
–Equiteq commissioned independent research of global consulting sector buyers.

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Strong investor activity
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2016 marks the third consecutive year of increased deal activity, resulting in
average deal values and share price performance reaching a ten-year high.
M&A activity (2007 to 2016) Equity market trends (2007 to 2016)

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Buyer demand across segments for highly sought
after capabilities
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Converging buyer demands
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Traditional boundaries between segments are blurring with increasing convergence.
Equiteq proprietary heat-map of convergence trends

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Average deal size
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Landmark consulting transactions drove an increase in average deal sizes, however
most activity concentrated between $10m and $500m.
Spread of deal sizes by segment

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Deal structuring
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The median disclosed deal saw 58% of consideration paid upfront and the
remainder paid as an earn-out over 3 years
2016 Deal structures

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Target structures
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On average buyers told us that they aim to pay c.45% of consideration upfront.

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Recent Equiteq deal structures
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Note: Upfront consideration includes escrow, balance sheet correction hold-back and other payments inside 6 months.
Orange bar indicates the proportion of upfront consideration targeted by buyers on our survey
Comparison of survey results with actual upfront proportion paid on Equiteq deals
%ofconsiderationpaidupfrontonEquiteqdeals

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Regional variations
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After temporary dips, buyers and sellers shrugged off political concerns in Europe
and North America.

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Cross-border deal activity
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Cross-border deal activity remained strong, highlighting the global nature of M&A
activity in consulting.

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The Equiteq Consulting Share Price Index
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The Equiteq Consulting Share Price Index rose strongly over the year and has now
reached a ten-year high.

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Subsector Performance
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Reported valuation metrics
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Average historic revenue valuation multiples for both M&A transactions and listed
companies were good to very strong across segments.

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Quoted valuations
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Strong M&A valuations are being supported by rising quoted valuations of listed
companies that are increasingly competitive on transactions.

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Buyer overview
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Serial strategic acquirers account for a substantial proportion of all deals
completed, many of whom are rapidly growing listed players.
Buyer statistics

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Accounting buyers
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Large accounting networks continue to expand their non-assurance offerings, but
deal activity is down.

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Private equity bid competitively on deals above $10m
and can be a very flexible solution for sellers
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Dry powder and interest in the consulting sector
driving financial buyer premium valuations
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Private equity
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Recent milestone private equity deals in the consulting industry are expected to
have a re-affirming effect on financial buyer interest in the space.

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Concluding thoughts
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The outlook for consulting M&A over the next twelve months is quite strong.
 The new year has already seen high profile deals across segments of the
consulting industry.
 Listed consultant share prices and valuations continue to rise.
 We expect that this strong demand will continue over the next twelve months.

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More resources
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