Support Services sector mergers and acquisitions comment – October 2008


Whilst we continue to be surrounded by doom and gloom I’m hoping this month’s newsletter will bring some light relief. There has been an array of M&A activity across the Support Services sector as well as a number of large corporates announcing their keenness to make further acquisitions.

Melorio, the UK listed training company announced it is looking to diversify through acquisitions. Nord Anglia, the UK based education provider is interested in acquiring school operators to facilitate its expansion in Asia. Eastlake Work Group, the UK office design consultancy plans to acquire in the UK and the US next year. Moreover, human capital management consultancy Penna Consulting, confirmed that it is currently examining prospective acquisitions.

The recruitment sector, whilst economically sensitive, has seen particularly high levels of deal completions this month. The larger generalist recruitment companies now realising their vulnerable positions, are seeking to develop and diversify their businesses by acquiring higher margin niche businesses. The good news is, according to a recent report, many owners of small niche recruiters are keen to sell. This is due to a number of factors; a combination of their businesses now reaching a critical point in their development, together with the tightening of credit and a reluctance of the money markets to finance the next phase of development.

So whilst the credit crunch will see both winners and losers, one thing looks likely, we’ll be seeing a lot more market consolidation in the recruitment sector.

Recruitment Deals

Generalist recruiter Kelly Services Inc has acquired niche accountancy recruiter Toner Graham. Kelly Services, the US recruitment business has acquired specialist accounting and finance recruitment company, Toner Graham, its first acquisition in over 20 years. Toner Graham is one of the fastest growing accountancy recruitment businesses in the UK. The Toner Graham management team will continue to run the business. The acquisition follows Kelly’s strategy of expanding into niche markets and more specifically its highly skilled and technical recruitment services divisions. The deal value was undisclosed.

IHR Group acquires part of Ellis Fairbank. Leeds based IHR has revenues of £16m and is making acquisitions in high-demand high-growth sectors both in the UK and overseas in order to continue the development of its brands. The parts of Ellis Fairbank that IHR has acquired relate to energy, transportation, FMCG and oil & gas amongst others. The deal value was undisclosed.

Management buys Halliday Williams & Associates. Halliday Williams is better known as the Sue Williams Group and Kingsgate Consulting. The business operates in the North West and provides secretarial consulting services. The deal value was undisclosed.

Syntax merges with Software Training Services. Syntax merges with Software Training Services.

NDK International acquired by its management team as founder retires. Executive recruiter NDK International has been bought in a management buy-out. The firm plans to re-brand and shift its core focus onto psychometric assessment, coaching and mentoring, leadership development, recruitment process outsourcing, team development, engagement, succession planning and talent management services. The deal value was not disclosed.

Technical recruiter EPCglobal has been acquired by US-based MPS Global. EPCglobal is a specialist staffing solutions company operating exclusively in the engineering and construction industries, supplying both permanent and contract staff. EPCglobal will continue to operate with the same brand name, but the acquisition extends MPS Global’s reach through EPCglobal’s network of international offices in Asia and Europe. Investment will be made in an expansion programme which aims to attract more skilled recruitment professionals to work at one of the new leaders in the technical field. The two companies will employ over 700 staff and have a combined turnover of more than £100m. The deal value was not disclosed.

Broadbean Technology has been acquired by Associated Northcliffe Digital (AND). Job posting and applicant tracking software company Broadbean, has been acquired by AND for an undisclosed sum. The company distributes more than 1.5m adverts every month to more than 700 job boards. AND also owns Conkers, which offers a similar service to Broadbean and Jobsite UK Worldwide. Through Jobsite, AND operates more than 40 generalist, niche and regional job boards. Broadbean becomes the 14th company to be acquired by AND as part of an ongoing strategy to build a leading position in the core classified verticals of recruitment, property, motors and dating.

Other Support Services Deals

Fundamental Data acquired by Morningstar for £12m. Fundamental Data, the UK provider of data on closed-end funds, has been acquired by the US quoted company Morningstar, a leading provider of independent investment research. Fundamental Data covers all UK, and US domiciled closed-end funds as well as offshore and local closed-end funds worldwide. Clients include major investment banks, stockbrokers, fund management groups, private client advisers, accountancy firms, wealth managers, and other professionals.

Digital Marketing Group acquires London based e-commerce consultancy Cybercom UK from Cybercom Europe AB. Cybercom is an IT systems consultancy and systems integrator specialising in e-commerce and electronic trading. It will bring new expertise and skills into the Digital Marketing Group and complement its specialist digital marketing offering. Deal value was £6m.

Capita has acquired ABS Network Solutions for £13m. ABS is a software consultancy business based in Crawley specialising in secure and scaleable IP based business solutions which drive productivity, innovation and business transformation. The acquisition enhances Capita’s position in the network services market.

Pearson has agreed to acquire a further 35% stake in Maskew Miller Longman (MML) for £45m. MML is a publishing company owned by South African based Caxton Group. The transaction is in line with Pearson’s strategy to expand its services in South Africa and provides a catalyst to bring together its education companies in the region into a new organisation. MML publishes across the school curriculum and in 50 languages.

PricewaterhouseCoopers has acquired retail consulting firm, Karabus Management. The combination brings significant opportunities for both companies to expand their retail consulting capabilities and assist retailers to improve their business performance. Karabus will continue to be led by its Founder and CEO, Antony Karabus, together with the entire Karabus senior leadership team. Established in 1990, Karabus is focused on helping retailers improve their financial performance in a highly competitive retail marketplace. Karabus employs approximately 50 retail specialists who are based in more than 15 North American markets. The deal value was undisclosed.

Spice acquires Morrel Consulting for £5m. Spice plc, a provider of utility support services has acquired Morrel Consulting Limited. Morrel provides specialist consultancy services to the water industry. In particular, Morrel has developed a software application that assists in the identification of unbilled and under-billed commercial and domestic properties and analyses consumption data to identify leakage and under-recording meters. The acquisition of Morrel significantly enhances the Spice water service offering.

Commerce Decisions acquired by QinetiQ for £9.85m. QinetiQ has acquired Commerce Decision, a market-leading provider of tender assessment and management software. Commerce Decisions is a privately-owned, venture capital-backed company with 38 employees based in Oxford. Its AWARD tender evaluation software supports the tender assessment and management process for both buyers and suppliers. AWARD ensures procurers make the right buying decision by improving the effectiveness of the evaluation process and providing an audit trail for decisions.