abril 12 2021

M&A deals for professional services firms rise as PE houses’ appetite grows


89 deals for professional services firms last year
PE firms now looking beyond consultancy firms to PR and advertising

London — The number of M&A deals for professional services firms rose from 76 in 2019 to 89 in 2020 – including 19 acquisitions backed private equity funds – as PE houses’ appetite for the sector grows, says Mayer Brown, the global law firm.

Mayer Brown says the recent sales of the restructuring arms of Big 4 accountancy firms KPMG and Deloitte have highlighted the increased interest in professional services firms from PE funds. KPMG sold its restructuring practice to H.I.G. Europe, while Deloitte sold its restructuring practice to professional services platform group Teneo, owned by CVC Capital Partners.

Both of these sales were likely influenced by the Big 4’s desire to divest business units as part of reforms of the audit profession.

While PE funds have long seen the appeal of the reliable, recurring revenues delivered by the traditional parts of the professions such as accountancy firms, recent years have seen them target acquisitions of firms in other areas of professional services such as advertising and public relations.

Two of the biggest PE deals for professional services businesses in 2020 were for communications businesses. PR group Huntsworth was acquired by Clayton Dubilier & Rice for £514m, while health communications consultancy Cello Health was bought by Arsenal Capital Partners for £175m to add to its health-focused professional services platform Pharma Value Demonstration.

Other PE-backed deals for professional services firms in 2020 included two advertising agencies, two marketing consultancies, an economics consultancy and a social impact consultancy. Mayer Brown says that improved revenue modelling by PE firms has given them increased confidence to invest in subsectors of professional services that are seen as higher-risk than accountancy and consultancy.

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