Business Services Reports
DIGITAL MARKETING LANDSCAPE
As consumer product and services companies continue to get smarter in engaging their customers and highly-segmented target customer demographics across all digital and online media realms, pressure continues to rise for Digital Marketing (DM) agencies to deliver actionable results across a wide spectrum of services. Business-to-Consumer (B2C) companies are increasingly demanding that the marketing agencies they utilize be able to deliver across a large continuum of capabilities and channels.
Frankly, the boutique or midsized Digital Marketing agency that can deliver impactful results in all of these areas is somewhat of a mythical unicorn. Unfortunately, these agencies often get caught in the trap of overpromising and under-delivering as they seek to meet client service demands across too broad of an array of objectives. The most progressive DM agencies are often enhancing their core services by using or creating specialized software tools that help their customers gain actionable information on their consumers faster than traditional channels.
PRIVATE EQUITY SPOTLIGHT: GENSTAR CAPITAL
Genstar Capital continues to be one of the most active business services investors in 2018. Through the second quarter, Genstar has made one business services platform acquisition, Drilling Info, Inc., and 30+ add-on acquisitions throughout its business services portfolio.
Drilling Info aligns with SDR’s Information Services segment and provides oil and gas data to EPCs including market research, asset analysis, investor relations reporting, refinery optimization modeling and midstream strategy.
With add-ons, Genstar has focused on building out its Employee Benefits Administration platform, Ascensus, with 16 add-ons since it acquired the company in 2015 and a whopping nine in the first half of 2018.
Genstar’s strategy for its business services investments has been to invest in core knowledge economy businesses and bolt on both similar people-based businesses and related vertical software and technology businesses. SDR expects Genstar to continue its business services buying spree in 2018 with initial add-on investments for Drilling Info in the realm of O&G strategy and analytics consultancies, and further vertical analytics technology firms for Ascensus and its physical resource management platform, Accruent…
Q1 INDUSTRY UPDATE
LOWER-MIDDLE-MARKET BUSINESS SERVICES MULTIPLES
Across B2B service providers with between $1.75mm and $25mm of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) that were purchased by private equity firms, the average Enterprise Value/EBITDA multiple rose to 7.5x in 2017, a full 1.2x above where companies within the same size range had been trading in 2015. In fact, this was the highest EV/EBITDA multiple paid by private equity for middle-market business services firms since the data began being tracked in 2003.
Additionally, the news is especially good for smaller business services firms. As illustrated in the chart below, for companies with between $1.75mm to $4.0mm of EBITDA, EV/EBITDA multiples rose 12.5% from 2016 to 2017. In 2017, the smallest PE deals within business services experienced multiples equivalent to those across the entire segment in 2015. As the private equity asset class has experienced disaggregation at the lower end of the market with the proliferation of small, spin-off funds and independent sponsors, PE investors have had to increase their valuations in order to close deals.
Can the rise in lower-middle-market valuations continue into 2018? We believe it will, based on the massive amounts of capital that PE firms are looking to deploy. However, in the long run, it’s hard to believe that many of these B2B service providers with limited scale can generate the types of exits that these PE firms need to justify the upward trend in purchase prices…
Q4 INDUSTRY UPDATE
H&E FINALLY GETS ON THE M&A SCOREBOARD
After H&E Equipment Services had Neff stolen away by United Rentals in the 3rd quarter of 2017, H&E finally got on the equipment rental M&A scoreboard with its first announced acquisition in over 10 years when it purchased Colorado-based Contractors Equipment Center for $122 million. United itself had reported a deal since 2014, before spending $2.2 billion to buy Neff and NES Rentals in 2017. Sunbelt, by far the most acquisitive of the major equipment rental players, continued to focus on acquiring smaller companies, but did raise its average U.S. deal size in 2017 to $76 million, compared to an average deal size of $20 million or less between 2014-2016.
MARKETING SERVICES STRUGGLED IN 2017
With the strong economy, job market and optimistic outlook on infrastructure development, it is no surprise that SDR’s HR, Real Estate, Information, Business Process Outsourcing (BPO), IT and Facility & Industrial Services public baskets have performed very well over the last year. By contrast, Marketing Services, with average stock prices down 9% (and the four largest companies by market cap down an average of 17%) from last year, is our lowest performing basket within Business Services.
A significant reason for the struggles within the Marketing Services segment is technology disruption, which is changing the way people consume content and, consequently, the way that businesses advertise and market their products. In August, WPP shares experienced their largest drop in the last 17 years following downward guidance to their already meager revenue growth forecast. WPP blamed the poor performance on decreased advertising budgets from its consumer product clients who are strategizing around transformational ways to gain consumer attention to their products. Omnicom recently announced its plans to strengthen customer relationships by offering better data analytics into their clients’ advertising and marketing campaign performance.
In 2018, SDR expects that the large Marketing Services players will be more active in M&A as they attempt to strengthen their data-driven insight offerings to meet customer demands in analyzing and predicting the effectiveness of marketing spend…
Q3 INDUSTRY UPDATE
PRIVATE EQUITY INTEREST IN BUSINESS SERVICES INCREASING YEAR-OVER-YEAR
Through the third quarter of 2017, the number of transactions with private equity buyers has already surpassed 2016 levels across SDR’s business services segments. In fact, private equity investments into business services in 2017 are on pace to exceed 2016 in by 42%.
HR Services has seen a particularly large increase, with PE buyers rolling up recruiting and staffing firms at a strong clip. This may signal an increase in consolidation within this space as white collar staffing agencies focused on common labor functions (administration, accounting & finance, legal, etc.) struggle against the continued proliferation of job board aggregators like Indeed or LinkedIn.
TERRACON CONTINUES LOWER MIDDLE MARKET ROLL UP
Engineering & environmental services firm Terracon completed its second acquisition of 2017 in the third quarter with its purchase of Dente Engineering. Since 2015, Terracon has reported 11 acquisitions across the continental United States. These acquisitions have ranged in size from four to 155 employees and amounted to Terracon adding approximately 368 employees through inorganic growth. Terracon’s M&A strategy has focused on lower middle-market firms with capabilities that are either directly related to its core geotechnical services or complementary in the form of site exploration, materials testing, industrial hygiene or air quality services. As a result, Terracon has entered the Top 30 U.S. Design Firms according to Engineering News-Record.
SDR will be watching intently to see if Terracon continues to focus on acquisitions in the lower middle-market or if the firm begins to reach for larger targets with the scale it has now achieved…
Q2 INDUSTRY UPDATE
REAL ESTATE SECTOR STRONG PERFORMANCE
In SDR’s basket of real estate services stocks (which excludes REITs), the top four companies by market cap experienced very strong performance in the 2nd quarter. In fact, as illustrated below, these four companies ended June with their stock prices between 97.1% and 99.5% of their 52-week highs.
Strong performance in this sector is both a reaction to, and an indication of, the robust housing market. The struggles of the retail sector may also have a negative correlation with commercial real estate brokerage performance as more churn among retail spaces can create more commissionable opportunities for brokers, as long as the overall U.S. economy remains solid and spaces are not suffering through long periods of vacancy.
CBRE has been especially active in all manner of real estate related M&A activity. In Q2 2017 alone, CBRE reported seven acquisitions across six countries. It purchased properties, a financial services firm, a property management firm, a brokerage, a software company and even a healthcare infrastructure project management firm…
Q1 INDUSTRY UPDATE
ACCENTURE’S AGGRESSIVE ACQUISITION STRATEGY
In Q1, Accenture announced a whopping eleven acquisitions (eight of which were stateside). All of these transactions were related to the company’s technology vision: “Technology for People: the Era of Intelligent Enterprise.” The acquisitions were made either to enhance Accenture’s core technological capabilities or to gain a deeper footprint into a specific industry vertical that is ripe for Accenture to bring its best-in-class technological capabilities into. Five of these deals were specifically to enhance the company’s technology services capabilities in systems integration, digital agency or cyber security. Accenture acquired four consulting firms primarily for their vertical industry expertise, with the intent of bringing its transformational technology services deeper into those segments. The remaining two targets straddled the line between industry knowledge and technology expertise. For instance, Accenture acquired InvestTech for its technology systems-integration proficiency in the financial services industry.
ARTIFICIAL INTELLIGENCE TO IMPACT WHITE COLLAR SERVICES
Automation and technology advancements have long been driving down the number of factory jobs. But will the latest advancements in machine learning and AI start to replace high-paying white collar jobs in business-to-business services? Historically, automation that was designed to replace labor for mechanical tasks actually created jobs for designing and programming those machines. With AI, we are now entering an age where robots and smart machines can do the designing themselves. Will AI replace ERP implementation consultants, data scientists, auditors and the like? Clerical labor for data entry in industries like financial services, insurance and real estate will likely be the first jobs to go. Fukoku Mutual Life Insurance in Japan is replacing some insurance claim workers with “IBM Watson Explorer” and the company predicts 30% improvement in productivity by doing so. McKinsey has published estimates that 30% of current business activities could be automated. SDR believes that AI will significantly impact middle market outsourced services companies that specialize in commodity white collar labor in the near future…
Q4 INDUSTRY UPDATE
In our 2016 outlook published at this time last year, we forecasted the Business Services industry to grow modestly in 2016, with the IT Services segment expected to be a strong force in the middle market, as entire industries transition to cloud computing and focus on digitizing their businesses. We expected Specialty Consulting to remain strong as well, with companies looking to improve operations and reduce inefficiencies.
Now that 2016 is complete, we can conclude that IT Services did in fact have a strong year, with our public basket posting a 10.3% average stock price increase, buoyed by a 9.6% Q4 increase (see chart on page 9). Top performers included ManTech International Corporation (39.72% increase) and Unisys Corporation (35.29% increase). The segment also produced 135 transactions, which was fourth among all Business Services segments.
As for Specialty Consulting, 2016 generated a 19.6% increase in our public basket, with a 10.5% Q4 increase driving strong growth for this segment as well (see chart on page 9). Navigant Consulting’s stock rose 63.01% in 2016, and ICF International spiked 55.23%. The Specialty Consulting segment finished third for Business Services segments in terms of transaction volume, with 224 deals announced in 2016. This segment has seen considerable consolidation over the past several years.
KEY Q4 TRANSACTIONS
December saw the announcement of a major IT outsourcing transaction, with the technology research and advisory firm Information Services Group’s (ISG) acquisition of Alsbridge. The move will form a 1,300-person firm with revenues targeted at $285-$300 million in 2017. ISG now will serve more than 700 clients and is expecting to gain $7 million in efficiencies over the first 18 months following the acquisition.
Another significant Q4 deal was Optiv Security being acquired by KKR. Optiv, which previously announced plans for an IPO, shifted gears when it received an offer from the prestigious PE group. Optiv is a leader in cyber security services segment, which was one of the hottest areas for M&A and investment in 2016 and is expected to continue to be hot in 2017.
Finally, Everyday Health, Inc., a provider of digital health marketing and communications solutions, entered into a merger agreement with Ziff Davis, LLC, a digital media company focused on the tech, gaming and lifestyle industries. Marketing service companies including digital advertising and media are expected to see substantial growth in the coming years.
DIGITAL ADVERTISING AGENCIES ARE POISED FOR 2017 GROWTH
With the large amount of digital opportunities available to companies through the internet, mobile and other mediums, marketing service companies and digital advertising agencies are looking to help clients differentiate their messaging to their users. By combining those digital opportunities with the enormous availability of data from users including detailed demographic data and location data, companies now are drowning in this ever-changing environment to reach their customers. Mobile has been, and is expected to be, the key frontier to understand…
Q3 INDUSTRY UPDATE
Industrial Services: A Hotbed of Investment Interest
The bread and butter of the business services industry is the continuous desire for many businesses to outsource non-core services. There is no place more exemplified by this trend than the industrial services segment, especially industrial services that are mission critical. In Q3 2016, we saw heightened activity by private equity and strategics in industrial service consolidations. As valuations are uncertain in the marketplace, “smart money” is looking for stable and growing businesses that have a recurring-revenue nature. Industrial services that are mission critical regardless of economic cycles fit the bill.
Rethinking Education Services After ITT Tech
With more than 35,000 students left without degrees and over 100 campus closures, the abrupt closing of ITT Technical Institute (ITT Tech) has left a large void in the education services arena. For-profit schools have struggled in recent years as the U.S. Department of Education has increased scrutiny over their practices and decreased their ability to receive federal aid. ITT Tech was not the only company impacted by this change in landscape. Both University of Phoenix and DeVry University have lost students due to recent allegations of misleading students. With the apparent failure of for-profit schools, the question being asked by the market is where these student will go to be educated.
Education technology has raised its hand as the natural solution. The failures of for-profit schools’ large investments in brick and mortar locations, poor education standards and generalized education programs can be solved by Ed Tech’s focus on innovative learning technology, data-driven student engagement and highly tailored education curriculums. In fact, outsourced learning has become a key opportunity for enterprises to retain employees. In the past, many students from for-profit schools left their previous jobs in order to pursue other careers. Now, enterprises are able to keep their employees, even if they desire different positions that require different skillsets, by partnering with Ed-Tech companies that provide tailored learning programs.
This shift in education is not a new trend; however, it is coming to fruition as students and learners are realizing that “old-school” programs are not always the best solutions for their education. Investments in Ed-Tech companies have continued to multiply as institutional capital and large strategic companies realize that students and learners need new methods to engage with education. Middle-market education companies are expected to see increased unsolicited interest, especially companies that are on the forefront of transforming the ways students learn through technology.
SDR is continually improving our quarterly reports in order to provide the most beneficial information to our clients and friends. In this quarter, we have restructured the previously titled “Professional Services” report to be more inclusive of the overall “Business Services” industry. Moving forward, SDR will track and report on the overall Business Services industry that includes the majority of the Professional Services segments.
Q2 INDUSTRY UPDATE
The Business Services industry was highly active in Q2 2016 with over 400 transactions announced. Many strategic companies expanded through bolt-on acquisitions, and larger middle-market PE groups added platform investments. Of note, Facility Services and Industrial Services saw continued consolidation as large strategics took advantage of their fragmented markets. Public company performance in Business Services was mixed as the uncertainty of Brexit affected groups that service the U.K. market. However, the strong tailwinds of enterprises continuing to outsource key functions of their businesses are expected to continue to drive demand for the overall Business Services industry.
The Reality of Technology-as-a-Service
As the adoption of technology in the Business Services industry gains further traction, firms in the middle market are finding significant competitive advantages by implementing technology that enables a more efficient service to their customers. Now more than in the recent past, Business Services companies are utilizing technology to deliver their core service, decreasing the number of employees and assets that are needed, and creating a more scalable business model. Premiums are being paid for service organizations that are able to create the coveted tech-enabled service model. In Q2 2016, a few transactions highlighted the allure of tech-enabled acquisitions by both strategic companies and private equity groups.
Much like the rest of the market this quarter, Professional Services transactions declined in Q1 2016 compared to Q1 of 2015, with the number of deals decreasing by 6.7%. Though there was a decrease from 2015’s record transaction levels, there remains robust M&A activity in the Professional Services industry. Specifically, IT Services accounted for a large percentage of M&A activity in Professional Services, as firms are acquiring technical expertise to expand their service offerings. IBM’s transformation by acquisition continued with its recent purchases of front-end design and creative services businesses. Although larger IT Services firms did not make significant acquisitions this quarter, many of them, including Accenture and Computer Sciences Corporation, have indicated that acquisitions will be a key part of their growth strategies in 2016.
Moreover, the Consulting/Legal/Accounting segment saw a significant uptick in both private placements and M&A activity this quarter. Most notable is private equity’s recent interest in the consulting space. Previously an industry that private equity avoided due to its high reliance on key partners, consulting firms now are completing transactions with private equity partners. The most recent example of this trend is the acquisition of Ankura Consulting Group, a management consulting and expert services firm, by Madison Dearborn Partners, a leading PE firm with over $18 billion of capital.
Adding to the activity in the Professional Services industry is the concern of upcoming regulatory changes by the Department of Labor (DOL). More specifically, the Investment Advice segment is expected to be impacted by the DOL’s imposition of a broadly applied legal fiduciary standard, placing additional pressure on broker-dealers and other financial services firms that provide retirement and other advice. As such, the Investment Advice segment has seen related M&A activity ahead of those possible changes, such as AIG’s Advisor Group’s acquisition by Lightyear Capital and PSP Investments. It appears likely that M&A activity related to these upcoming regulatory changes for the Investment Advice sector will continue through 2016.
After an exceptional start to 2015, M&A activity for Professional Services continued to grow in Q4, with total transaction value increasing by a booming 40%. IT Services remained the most active segment of late, as firms such as IBM and HP continued to acquire cloud storage providers and bet big on hybrid cloud capabilities. In an effort to establish expertise in growing industry verticals, Q4 also saw continued consolidation of consulting firms by industry leaders. Accenture, a global leader in consulting services, spent over $850 million on acquisitions in 2015 and plans to continue heavy acquisition activity in 2016, outlining nearly a billion dollars in future acquisitions. Private equity also made key acquisitions in Consulting Services, as more and more Consulting firms develop recurring revenue businesses that are attractive to a fund looking for leveraged buyouts.
Low interest rates, strong corporate balance sheets, and large amounts of available cash helped fuel a record year for M&A in Professional Services. Although acquisitions increased by 1% over 2014 levels, overall transaction value surpassed its six year high, topping $68.8B at the end of 2015. Easy access to capital and firms eager to capture niche expertise were key drivers for M&A. Professional Services firms looked to acquire expertise and to leverage social, mobile, analytics and the cloud to help their clients transform their enterprises into a digital businesses.
The outlook for Professional Services M&A is shaping up to be less robust, yet still strong, in 2016. Thanks to a rebounding economy, Professional Services is predicted to grow slightly in the coming months as companies look to expand their technological capabilities. The IT Services sector is again expected to be a strong force in the middle market as entire industries transition to cloud computing and digitize their businesses. Strong corporate profits will continue to drive Consulting Services as companies explore improving operations inefficiencies and gain competitive advantages through proprietary technology and business models. Investment Advice activity is also expected to pick up in the coming months as financial institutions shed non-core, capital-intensive services deemed risky by regulators.
In the past twelve months, the Professional Services Industry has vastly outperformed the S&P 500, even after accounting for the large overall market decrease in the last quarter. M&A activity in Professional Services also has outpaced other industries, with 2015 trending towards a record high for the number of Professional Services transactions.
Two key macro drivers of this growth are the low unemployment rate in the United States, which has forced companies to utilize outsourced resources due to the lack of internal talent, and strong corporate profits, which are allowing companies to spend to improve operating efficiencies. With no end in sight regarding these two factors, SDR expects Professional Service firms that provide a focused expertise to benefit greatly from overall market trends.
Additionally, new regulatory changes will continue to drive consolidations. For example, Apex Companies, LLC recently acquired InterTech Environmental & Engineering, an environmental-management firm specializing in the oil and gas sector. In anticipation of new regulations from the Environmental Protection Agency (EPA), environmental consulting companies are consolidating with engineering firms. New regulations are expected to restrict methane emissions for the oil and natural gas industries and impose emissions control regulations in other industries. This vertical integration allows environmental-consulting firms to leverage knowledge about land use, energy efficiency and emissions regulations while also building expertise in construction and renewable-energy sources.
Recurring service offerings and industry-focused solutions continue to be dominant themes in the Professional Services industry, particularly in the Consulting and IT services arenas. Traditional Consulting firms have long desired to increase recurring and niche, industry-specific revenue, and have utilized M&A in recent quarters to do so. Specifically, in June 2015, NTT Data, a global IT services company, acquired Carlisle & Gallager Consulting Group in order to expand its financial services practice. Although NTT Data previously had a focus on financial services, NTT found that it needed to extend its industry capabilities through an acquisition. As these large firms look to expand vertical expertise, Professional Service firms purely focused on a specific industry will continue to be attractive M&A targets.
Technology innovation has also become a requirement in high growth Professional Service firms. Technology solutions have enabled companies to be more efficient with their highly valuable personnel and have driven industry growth in the recent quarter. Solutions that utilize technology not only provide professional firms with a recurring revenue stream but also make firms highly desirable in the M&A market. Leading firms like Accenture and CGI have recently stated in their outlook that technology-enabled solutions will be a key differentiator going forward.
With both the M&A market and the public market in Professional Services thriving, middle market companies are expected to benefit from these tailwinds through the end of the year.
M&A deal flow within the professional services industry remained relatively stable throughout Q1 2015 as compared to Q4 2014. Both insurance brokerage and IT services showed improved deal flow activity in Q1 2015. The insurance brokerage sector’s increase in transactional activity was mainly due to the expansion of car, life and most notably, health insurance coverage. Premiums for family health insurance coverage increased 3% over 2013 averages to $16,834 in 2014. As a result of these rising prices, consumers are increasingly shopping around when choosing a provider. Due to this strong surge of demand for private exchanges, major brokers such as Towers Watson and London-based Aon have seen a rise in share price of 20% and 21%, respectively, over the past year.
IT services have also continued to experience increased M&A deal flow this quarter. Deal activity this quarter has mainly been instigated by the heightening growth prospects of Software as a Service (SaaS), particularly cloud computing software. This trend is causing a shift in demand from traditional IT systems and services to more integrated software solutions. Industry forecasts estimate as high as $78.43B in SaaS revenue will be generated in 2015, increasing to $132.57B in 2020, and attaining a compound annual growth rate (CAGR) of 9.14%. Moreover, Cisco predicts that by 2018, 59% of the total cloud workload will be SaaS. This forecast has resulted in many new opportunities for IT consulting and training services, as enterprise customers increasingly seek integration of these emerging technologies. As a result, the professional services industry will continue to drive high levels of cross-sector acquisitions of IT companies. One need look no further than the Atos acquisition of Xerox’s IT outsourcing business for $1.1B. Xerox divested its IT outsourcing business to focus on its core Business Process Outsourcing (BPO) operations, while Atos gained access to Xerox’s blue chip clients.
Led by increased demand for insurance brokerage services, the professional services industry witnessed healthy Q4 growth and continued high levels of M&A activity. The real estate sector continues to gain confidence, as consumer demand and the construction industry regain their footing post-economic downturn, albeit at a slowed pace relative to 2013. Conducive credit markets, growing consumer and corporate spending, an improving housing market, and rising average selling prices promise increased demand for real estate companies in the upcoming years. IT services continued to dip in Q4, largely due to IBM’s 20% stock price drop this quarter, caused by 2015 revenue forecast drops and difficulty transitioning to new cloud computing technologies. However, overall IT sector performance remains stable due to high corporate demand for IT services. Additionally, the professional services trend of bundling services is continuing to prompt high levels of cross-sector acquisitions of IT companies, as revealed by the 123 IT transactions in Q4 2014.
Insurance brokerage witnessed high levels of growth at the close of 2014, largely due to rising car sales, homeownership, and employment as well as the proliferation of online services. The human resources, consulting/legal/accounting, and investment advice sectors grew mildly in Q4, led by gradual mounting of corporate and consumer demand. Overall, growing corporate profits have led to increased demand for all professional services, particularly those that are affected by technological advances and new government regulation, and high company valuations continue to reflect this growing demand in the M&A market.
The drop of corporate profits by 0.3% between the second quarter 2013 and 2014 prompted an industry slowdown and decline in stock prices across the professional services industry in the third quarter of 2014. Despite this deceleration, the rapid evolution of business technologies and recent increase in healthcare regulation promise a greater need for professional services throughout 2014 and years to come.
Rising business and consumer spending continue to promote M&A activity in the professional services industry. IT Services and Consulting/Legal/Accounting continue to lead in number of transactions, as these companies seek to acquire expertise in high-growth areas, particularly healthcare and energy. The massive acquisition of the healthcare IT company Trizetto by Cognizant Technology Solutions for $2.7 billion is evidence of this trend. The traditionally highly-fragmented professional services industry continues to witness increased levels of cross sector acquisitions as the demand for bundled services and “one-stop shopping” grows. This trend can be partially attributed to the growing role of technology in the industry, particularly Business Intelligence, Cloud, Security, and Big Data services.
Although total transactions are slightly less in Q3 than the past two quarters of 2014, the professional services industry can expect continued growth in Q3 in number of deals and amount of capital invested. Middle market companies are projected to have greatest access to this capital while large and small companies will continue to seek growth through acquisition.
An increase in corporate profits and the need for companies to be more efficient with resources have increased the demand for professional services in the first half of 2014. Many corporations are experiencing topline growth in 2014, but do not have the necessary resources to capitalize on this growth; thus, companies are increasing its use of outsourced professional services.
In the deal space, IT Consulting and Consulting/Legal/Accounting continue to lead transactions, as these companies look to acquire additional expertise. Both the insurance brokerage and real estate services industries are experiencing consolidation as long time owners look to take advantage of the seller friendly environment. Additionally, there has been an increase in cross sector acquisitions as professional service firms expand offerings to customers. For example, SDR has observed an increase in accounting firms acquiring consulting and IT services firms.
There may be headwinds for professional services firms as the macro-economy is projected to have decreased growth for the balance of 2014. Acquirers will remain active as they continue to be able to access significant amounts of leverage. Large corporations, as seen by transaction activity, will continue to look for substantial growth to differentiate themselves from their competitors.
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