While many sectors saw a downturn in M&A activity last year, a new report has revealed that dealmaking in the consulting sector remained resilient. Consulting M&A was boosted by companies using acquisitions to secure their market position or move into new areas, while the range of challenges that many industries continue to face meant that demand for consulting services remained strong.
According to the report from Boxington, despite a 27 per cent drop in the number of overall high value M&A deals in 2023, this downward trend was not apparent in the consulting sector. Boxington senior analyst and co-author of the report Kashif Beig said that consulting sector valuations outperformed the majority of share indices, despite the various global headwinds faced, mirroring a trend seen during and after the COVID-19 pandemic.
Beig continued that, while EBITDA valuation multiples demonstrated that the sector was not entirely unaffected by headwinds, overall activity was strong, saying: “EBITDA valuation multiples however were stable over 2023 as markets, buyers and investors look to the future and anticipated lower demand and growth rates. Finally, M&A deal activity was strong over the year to date, with strategic buyers being the sector’s most acquisitive buyer category.”
Boxington’s analysis showed that dealmaking began the year strongly, with 34 per cent of 2023’s overall deal volume occurring in the first quarter, before activity dropped off in the second (16 per cent) and third (21 per cent) quarters and recovered in the fourth (29 per cent).
In terms of buyer types, strategic buyers were the most active group, accounting for 42 per cent of deals, followed by private equity-backed strategic buyers (38 per cent) and private equity firms (20 per cent). Despite the growing importance of technology and AI in consulting, meanwhile, acquisitions were dominated by deals for traditional advisory services (78 per cent), with tech and AI-enabled consulting accounting for just 16 per cent of transactions.
The report found that America was the largest market for M&A, both in terms of where buyers were headquartered (36 per cent) and where acquired companies were based (34 per cent). Europe was home to 27 per cent of buyers and 30 per cent of acquired firms, while the UK and Ireland accounted for 20 per cent of buyers and 23 per cent of acquired businesses.
Although a significant number of buyers used acquisitions to consolidate their positions in existing markets, many others sought to move into new areas or geographies. The report cites Elixirr’s deal for Insignium and L.E.K Consulting’s acquisition of Hi Mum! Said Dad as examples of deals that enabled diversification in terms of both sector and geography.
Consulting M&A has seemingly benefitted from the major challenges that businesses in many other sectors face, with consulting firms seeing strong demand for services such as AI adoption, digital transformation, sustainability advice and restructuring. Consulting companies that use acquisitions to move into new areas and regions, therefore, can increase their revenues and gain market share, helping them to build resilience and gear up for further growth.
Read about the factors driving M&A in professional services industries
Offering marquee hire from small to large this business services mainly the events industry, its own smaller marquee competitors and occasional work directly with individuals. They can support parties and weddings through to corporate dinners, festiv...
LEASEHOLD
This contemporary, stylish 4 star hotel has 24 comfortable and individually-designed ensuite bedrooms, a modern bar and a recently refurbished restaurant with a great vantage point and some of the best seaside views in North Wales.
This is an attractive and strategically well-located hotel in the heart of Porthmadog and a stone’s throw from the junction of the A497.
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.