Professional Services Practice Overview

Introduction

Harris Williams is pleased to present our Professional Services Industry Update for November 2020. This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global professional services industry.

We hope you find this edition helpful, and we encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities or our relevant industry experience.

Our Practice

Harris Williams’ Business Services Group has experience advising companies that provide a range of commercial, industrial and professional services. 

This particular report focuses on trends and metrics in the following areas:

  • Business Process Outsourcing
  • Consulting
  • Education & Training
  • Engineering
  • Financial Services
  • Governance, Risk & Compliance
  • Human Capital Management
  • Information Technology
  • Insurance & Risk Management
  • Legal Services
  • Marketing & Information
  • Workforce Solutions

Representative Professional Services Transactions

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What We’re Reading

The Strategic Move for Services Firms

Grant Thornton  11/2/2020

“The professional services firms that serve clients under $100 million in revenue have been much more affected – because some of their client base is slower to come back. When companies are tight on cash, they will postpone third-party projects.”

“The technology for remote work and remote client services has been a critical enabler and differentiator for services firms. The firms which did not have this technology in place have struggled to adapt while also maintaining their business.”

Read the full article here.

Being Future-Ready Means Being Cloud-Ready for Professional Services Firms

Legal Business World  10/30/2020

“As of today, it is quite unlikely that firms will dial back on their technology investments – instead, we even see increasing technology investments in order to keep up with a faster evolving competitive landscape. Gartner predicts an annual growth of 5 to 15% for the technology spend of professional services firms – even factoring in the steadily decreasing unit costs for many technologies (e.g., storage, processing, etc.).”

Read the full article here.

3 Trends Impacting Revenue Growth at Professional Services Firms

Salesforce  10/27/2020

“Professional services firms are more likely than other industries to speed up their technology adoption in response to the pandemic. A majority, 87%, of professional services leaders say their digital transformation has sped up since 2019 compared to an average of 79% across other industries.”

Read the full article here.

Unfazed by US Election, M&A is Poised for Growth

Law360  10/20/2020

“Private equity buyers, for example, are loaded with billions of dollars in dry powder that has been raised in recent years and must eventually be deployed. The PE industry is well-positioned to capitalize on a potential rash of special situations and distressed deal opportunities in the coming months.”

Read the full article here.

Recruiting Sector is Weathering the Pandemic Storm

Hunt Scanlon Media  10/7/2020

“Staffing companies, like many other businesses, have had to reduce the number of internal employees as a result of COVID-19, but just how commonplace are these cuts? Almost half of businesses have conducted layoffs. A total of 48 percent of respondents said their company has reduced internal employees, including furloughs.”

Read the full article here.

How Law Firms and Professional Services Have Adapted to Survive COVID-19

Entrepreneur  9/21/2020

“The legal industry has been among the most resistant to “going digital” but in a post-COVID-19 world, the legal industry will be forced to adapt.. Business development is just one aspect of the legal world that is going to be transformed by the pandemic as remote working becomes more normal and firms are forced to rethink how they allocate talent.”

Read the full article here.

Public Markets1

Historical Stock Prices – Last 5 Years

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Historical Median TEV/LTM EBITDA Multiples – Last 5 Years

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Notes: Data as of November 13, 2020. Sub-sector indices weighted by stock price.

Public Markets1

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Notes: Data as of November 13, 2020.

Economic Trends

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M&A Market Trends1

Professional Services M&A Volume by Year

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Note: Data through November 13, 2020.

Representative Professional Services M&A Transactions by Sector

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1. S&P Global Capital IQ

2. U.S. Bureau of Economic Analysis

3. The Conference Board

4. U.S. Bureau of Labor Statistics

5. U.S. Department of Labor

6. Institute for Supply Management

 

Public Comparable Companies:

BPO: Cognizant, Computershare, DXC, ExlService, Genpact, Sykes Enterprises, Tata Consultancy, TTEC, Wipro, and WNS

Consulting: Accenture, CBIZ, CRA International, FTI Consulting, Huron Consulting Group, ICF International, and Resources Connection

Human Capital: 51job, ASGN, Barrett Business Services, Hays, Heidrick & Struggles International, Insperity, Kelly Services, Kforce, Korn Ferry, ManpowerGroup, Randstad, Robert Half International, SThree, TrueBlue, Willis Towers Watson

IL&R Services: Aon, Arthur J. Gallagher & Co., Brown & Brown, Crawford & Company, Marsh & McLennan Companies, Willis Towers Watson

M&I Services: Alliance Data Systems, comScore, CoreLogic, CoStar Group, Equifax, Experian, FactSet, Fair Isaac, Forrester Research, IHS Markit, Informa, LiveRamp Holdings, Moody's, Morningstar, Nielsen Holdings, Omnicom Group, Publicis Groupe, The Interpublic Group of Companies, Thomson Reuters, Verisk Analytics, Viad, Wolters Kluwer, WPP

Transaction Processing: Automatic Data Processing, Fidelity National Information Services, Global Payments, Jack Henry & Associates, Paychex, The Western Union Company

Education and Training: Adtalem Global Education, American Public Education, Franklin Covey, GP Strategies, Grand Canyon Education, K12, Lincoln Educational Services, Pearson, Scholastic, Strategic Education, Zovio