By Ramone Param, Global Lead - Consulting Industry Intelligence, Strategy, and M&A
Advisory at Kennedy
Published October 7, 2024
Consulting Industry Reports and Market Trends
The M&A landscape in the consulting sector has shown resilience and growth through Q3 2024, driven by rising valuations, robust private equity involvement, and a stable deal count despite regional and segment variations. Here are the key insights from Kennedy M&A’s latest market update.
Key Highlights of Q3 2024 M&A Market Update:
20% rise in median revenue and EBITDA valuation metrics.
46% of deals driven by private equity, nearing a 10-year high.
Overall deal count remains stable, with variations across regions and segments.
Valuation Metrics Surge in the Professional Services Industry
Valuation metrics in the professional services sector are on the rise, with demand
for high-quality assets pushing prices higher. Here are some insights on the valuation trends observed in 2024:
Key Insights on Rising Valuation Metrics:
20% increase in median revenue and EBITDA valuation metrics.
High demand for quality assets in growth segments.
Variability in valuation outcomes influenced by:
Quantitative factors (e.g., revenue growth rates, profitability).
Qualitative factors (e.g., brand reputation, market niche).
Deal structures and unique circumstances significantly impact valuations.
Median revenue and EBITDA valuation metrics have surged approximately 20% in 2024, reflecting a premium on quality assets in high-growth segments.
This increase in valuation indicates a recovering demand from buyers, especially for high-quality assets in niche areas where acquisition opportunities are limited. Although average metrics are up, we caution that valuation outcomes can vary widely based on both quantitative metrics and qualitative aspects of the target company.
Kennedy’s proprietary data highlights these valuation trends, showing a marked shift in
buyer sentiment. While median figures provide an overview, they don’t capture the entire picture, as deal structure and unique circumstances can significantly impact individual deal valuations. Yet, the overall increase in valuation points to an improved pricing sentiment in 2024.
Revenue and EBITDA valuation metrics (2013 to 2024 YTD):
Private Equity's Role in the Consulting Industry Reports Strong Growth
Private equity investors in the consulting industry have played a significant role in
driving deal activity in Q3 2024. Here’s a breakdown of the highlights in private equity-
backed acquisitions:
Private Equity Activity Highlights:
46% of deals in Q3 2024 driven by private equity.
Key factors include:
o Favorable market conditions and growth potential in hot segments.
o Large reserves of capital ("dry powder") available for investments.
Major private equity deals include:
o EQT’s acquisition of Perficient.
o Apax’s take-private of Thoughtworks.
o New Mountain Capital’s investment in Grant Thornton.
o Carlyle’s stake in SEIDOR.
Private equity-backed acquisitions accounted for 46% of deals through Q3 2024, touching
10-year highs. Financial buyers have become increasingly active in consulting and digital
services, bringing transformative operational improvements and strategic initiatives to their
portfolio companies. Favorable tailwinds in hot market segments and significant available
capital ("dry powder") have also contributed to this trend.
Prominent deals over the past year include EQT’s acquisition of Perficient, Apax’s take-
private of Thoughtworks, New Mountain Capital’s investment in Grant Thornton, and
Carlyle’s stake in SEIDOR. These transactions underscore private equity’s substantial role in
shaping the industry. Beyond headline deals, activity at the middle and smaller end of the
market remains vibrant, with midmarket investors and bolt-on acquisitions continuing to enrich the ecosystem.
% of Deal Count by Private Equity:
Overall Deal Count Holds Steady, Reflecting Underlying Variations
Although the total deal count remains flat compared to last year, underlying variations are evident. Here are some factors contributing to this stability and the underlying variations:
Factors Influencing Deal Count Stability:
Supportive macro and industry drivers for 2024.
Improved financing conditions after tightening capital markets in 2023.
Segment-specific and regional variations:
o Growth in high-demand consulting segments.
o Differences across geographic markets.
While the total deal count for 2024 remains largely flat compared to last year, this masks
important variations by region and segment. The sector is experiencing a gradual return in
M&A activity, buoyed by favorable macroeconomic trends and industry-specific drivers. Improved financing conditions have supported deal-making after a challenging period of constrained capital markets and heightened operational uncertainties.
Our ongoing discussions with buyers suggest a strong close to 2024, despite lingering risks
from geopolitical uncertainties and the upcoming U.S. election. Buyers are cautiously
optimistic, and we expect further momentum in Q4.
Deal count (2013 to YTD 2024):
Looking Ahead: Trends in Global Consulting Industry M&A
The consulting sector M&A landscape continues to evolve, with strong prospects for Q4 2024. Here’s what we expect in the coming months:
Future Outlook for Consulting Industry M&A:
Continued momentum in Q4 2024, despite macro risks.
High valuations for quality assets in growth segments.
Further private equity involvement likely to fuel deal flow.
Close monitoring of geopolitical risks and the upcoming U.S. election.
The consulting market remains dynamic, with rising valuations, active private equity involvement, and a steady flow of deals reflecting both challenges and
opportunities. As the industry evolves, Kennedy continues to monitor market trends closely to provide actionable insights for strategic decision-making.
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Please note: This article is for educational and informational purposes only and does not
constitute investment, tax or legal advice. The intelligence has been gathered from a variety
of public and non publicly available sources. The views and opinions expressed in this article are those of the author and do not represent the views of any affiliate organization.
Any opinions or views expressed are as of the date written and are subject to change without notice, and may be updated or modified at any time.
If you would like to arrange a meeting with our lead M&A advisor to discuss your M&A objectives further, please reach out to info@kennedymanda.com
