BrazilM&A in Asia Pacific's professional services industry drops by one fifth
According to newly released data from specialist M&A advisory Equiteq, merger and acquisition activity in the Asia Pacific professional services sector has dropped by nearly 20 percent in the first half of the year on 2017 H1 figures, with the regional results reflecting ongoing global trends.
In its first half M&A ‘Knowledge Economy’ report for 2018, Equiteq, a specialist M&A and strategic advisory for the tech and professional services sectors, has outlined the global downturn in deal-making on last year’s results, with the professional services M&A market contracting by 5 percent worldwide. For the Asia Pacific, the drop in volume stands at 19 percent – the greatest of any region.
Altogether, the Asia Pacific witnessed 87 knowledge economy deals to July, with the 568 deals in North America and the 454 closed in Europe also down by 3 and 5 percent. But while activity has slowed in the comparative year-on-year figures, the median global deal price has risen to $13.6 million, with the report summarising: “Buyers appeared to be focused on a smaller number of larger deals.”
The first half results are in line with a trending recent decline in global activity, with deal volume down over the past two years, including an overall drop of 5 percent for the whole of 2017 (although it should be noted that the first half of 2017 was stronger than H2). Numbers wise, the 2,669 deals recorded worldwide in 2015 fell to 2,502 in 2017, and stand at 1,181 for the first half of this year. Over this period, the Asia Pacific has dropped from 246 in 2015 to just the 87 so far this year.
Equiteq’s M&A ‘Knowledge Economy’ benchmark reports focus in on five specific segments of the knowledge-intensive professional services sector, namely management consulting, information technology consulting, media agencies, engineering advisory services, and human resources, with management (300 deals) and IT consulting (375) continuing in H1 2018 as the largest deal flow segments across the industry and human resources (151 – up 7%) and media agencies (275 – up 3%) demonstrating the strongest growth.
Also of note for the Asia Pacific is the region’s ongoing status as the world’s leading hub for cross-border deals – a category accounting for 24 percent of all global deals in the first half of the year, and 29 percent of the Asia Pacific closures in 2017. Stand-out sector deals for the region so far this year include the cross-border acquisitions of Singapore IT services provider Axentel by the US-based Park Place Technologies – with the sell-side advised on by Equiteq – and Accenture’s pick up of Chinese full-service digital marketing agency HO Communication.
With respect to Equiteq’s role as an sell-side advisor to Axentel, the IT firm’s founder Jerry Yiu said at the time; “While joining Park Place looked from the outset like the perfect strategic move for us to make, there were quite a few complex issues that had to be addressed. Throughout the process, the Equiteq team have done a great job at preparing us, assisting us and ironing out all difficulties as they arose. I am sincerely grateful to them for having made this deal possible.”
