Consulting to Divestitures remains strong despite slowdown in overall M&A markets — but deals continue to increase in complexity
ALM Intelligence Rates Transactions – Divestitures Consulting Providers for 2019
New York, NY – January 14, 2020 – New research from ALM’s Consulting Intelligence division, formerly known as Kennedy Consulting, reports that while overall M&A deal volumes are down, consultants’ sellside M&A pipelines remain full, and the forecast for 2020 is strong.
“Clients are re-centering themselves and freeing up liquidity after years of fundamental business model changes and shopping sprees,” said Tomek Jankowski, Senior Analyst at ALM Intelligence. “But with global political instability and economic uncertainty, clients are under pressure to execute on deals as quickly as possible, leading to further compression of already accelerating deal timelines.”
ALM Intelligence explores how consulting providers are adapting to what remains a lucrative market, but also increasingly a challenging one:
- By their nature sellside M&A deals tend to be smaller than buyside deals. As consulting providers chase more deals downstream in the middle market, this is even more true, coupled with less experienced clients with greater price sensitivity
- Client concern about data in deals from the perspective of cybersecurity, regulatory hurdles and end-user customer reactions has skyrocketed, requiring intense levels of investment by consulting providers to continuously expand their technology capabilities
- The increasing complexity of sellside deals combined with less clientside experience favors consulting providers taking on a greater project management role in deals, in effect winning greater projectshare. But this, in turn, is putting pressure on providers to be able to manage the entire deal process, through in-house investments and closer service integration as well as via strategic alliances. The Big Four are not immune and have been aggressively building out their service ecosystems.
Sellside deals are smaller scale, more complex, and both labor and resource-intensive events for consulting providers, and are usually tied to other events — an acquisition, a regulatory event, a restructuring, etc. As well, the emphasis has shifted from getting clients over a pre-determined deal value threshold by Day 1 to ensuring clients remain on track with value targets for years, for instance over a product life cycle, etc. Until fairly recently, within the past five years or so, sellside M&A was treated as buyside M&A in reverse, both often handled by the same TAS or deal team. Consulting providers in 2020 need to master sellside M&A capabilities, with dedicated resources including increasingly, dedicated teams. Sellside M&A is not an add-on service offered on the side; it requires of providers full commitment. The reward is less the fees earned from a deal, than the longer-term relationships with clients as deal adjustments often lead to further service engagements (e.g., cloud, strategy, transformation, etc.), while interim deal services (e.g., interim CFO, tax, etc.) can lead to managed services or as-a-service relationships.
Providers covered in the report include A.T. Kearney Holdings Limited, Accenture LLP, AlixPartners, Alvarez & Marsal Holdings, LLC; Andersen, Bain & Company; Baker Tilly Virchow, Krause, LLP; BDO International, Boston Consulting Group, Centric Consulting, CRA International, Inc. (Charles River Associates); CrossCountry Consulting, Crowe LLP, Deloitte LLP, Duff & Phelps Corporation, EY LLP, First Key Consulting, FTI Consulting, Inc.; goetzpartners, Grant Thornton International, Ltd.; hu Consultancy, Intelligentis, KPMG, L.E.K. Consulting, Logan Consulting, McKinsey & Company, Mercer LLC, North Highland, Oliver Wyman Group, Protiviti, Inc.; PwC, RSM International, Stax, Tata Consultancy Services, West Monroe Partners, LLC; and Willis Towers Watson.
ALM’s Vanguard research series assesses firms in terms of their relative ability to create impact for their clients. In addition to its overall rating assessments of consulting providers’ depth and breadth of capabilities and best-in-class provider designations, this series includes detailed capability evaluations for each covered provider as well as a qualitative analysis of their consulting organization, approach, and service delivery model.
For more information or to obtain the full version of The ALM Vanguard:
Transactions – Divestitures Consulting, visit the ALM Intelligence website: http://crp.consulting.almintel.com/#/allreport
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