Benchmark International

The professional services sector is expected to reach a 10-year high in 2023, based on the latest figures in a report by Experian. According to its MarketIQ Micro Insight report, there have been a total of 92 acquisitions in the advisory sector to date in 2023 with a total value of £899m.

If this trajectory is to continue, this will exceed analysis for the last decade.

Looking at the past ten years, there is an upward trend in acquisitions by advisory firms with an average year on year increase of 10 per cent.

Last year, there was a 22 per cent increase on 2021's total - up to 181 deals and the highest volume seen by Experian in the sector.

What is the professional services sector?

The professional services sector is a varied one, but generally provides support to businesses by helping them to manage and grow.

Encompassing a wide range of sub-sectors, professional services can include companies providing legal services, audit, accountancy, advertising and market research, management consultancy, architectural and engineering activities, and employment activities.

What is behind the interest in professional services businesses?

Private Equity

Private equity firms still have high levels of dry powder to deploy, recently estimated at $1.3 trillion.

Professional services companies have seen strong interest from private equity looking to deploy this capital as a result of the sector’s strong revenues; synergies between diverse businesses; the ability to acquire adjacent capabilities responsive to changing market conditions and evolving trends; and the chance to acquire and consolidate businesses at scale.

Recurring revenue streams from sectors such as consulting and accountancy are also attractive to private equity firms, as well as responsive sectors such as cloud consultancy and healthcare advisory, borne from the challenges posed during the pandemic.

Environmental, Social and Governance

Environmental, social and governance (ESG) standards are currently a hot topic, as businesses are having to seriously consider their ESG credentials to meet the changing expectations of clients and stakeholders. Reflecting this is a strong interest in firms acquiring ESG consultancies.

Acquisitions in building energy management and control are also on the up, due to increasing regulation and focus on ESG.

On the latest figures, Jane Turner, research manager at Experian, summarised: "Professional services have seen a wave of consolidation in the M&A market over the last ten years.

"Our data reveals a positive upward trend in the acquisitions by advisory firms with an average year on year increase of 10 per cent and a 22 per cent increase on 2021 total volumes, with the 181 deals recorded in 2022 being the highest volume we have seen in this sector.

"Financial advisers and managers transactions are driving the activity, while legal and accountancy deals are also on the rise.

"This is clearly an increasingly attractive way for advisory firms to expand into new locations and broaden their service offering, recruiting high quality talent, ultimately allowing the opportunity to increase their client base and resulting revenues."

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL:

Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $10 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.