Accenture Merger & Acquisition Playbook

Accenture was the top acquirer of companies in the last 30 months, spending over 1.2 billion on 53 buyouts

Source: Company Website

Accenture is a global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all industries. With 505,000 employees covering over 120 countries, Accenture specializes in incorporating technology to elevate performance and achieving strategic goals through technology capabilities.

Over 65% revenue resulted from digital, cloud and security services, with consistently increase in operating margins (14.6%, 20bps increase from 2018) have positioned Accenture as one of the unicorn specializing in technology consulting. Other competitors including IBM, Big4, MBB. Accenture currently serves 91 of the Fortune Global 100 and approximate 80% of the Fortune Global 500.

Accenture’s acquisition drive has been an effort to build digital capabilities. A few of the acquisitions include Clarity Solution Group, who provides data analytics consulting services, and French consulting firm Silveo that offers services and solutions for digital manufacturing and intelligent supply chains. Another key acquisition was Pragsis Bidoop, a Spanish company with strong expertise in big data, AI and advanced analytics.

Accenture has a visionary strategy towards M&A, part of it has illustrated from this article about “M&A: From Science to Art”. Accenture believes “Digital is in the Driver’s Seat”, one because of how technology capability could add values to the business in different facets, two because of the essentialism of digital implementation due to consumer’s/operation’s needs. According to Accenture Strategy Research, Of the companies most active in M&A, more than ½ of their #acquisitions were related to gaining digital capabilities. “Acquire New Digital Capabilities” has also become the largest trigger above scaling and adaption when companies asked what typically triggers an M&A event.

Source: Accenture Newsroom

In execution, Accenture follows a M&A Maturity Model framework where it outlines all the necessary steps required to execute a deal. The process map differs according to the specific context as well. 64% acquirers kept their digital acquisition targets as standalone companies where there are only 4% are fully integrated to parent company. The execution processes between tech-led acquisitions have begun to differ with traditional acquisitions as tech-led acquisitions focuses a lot more into strategy management and building a comprehensive universal digital infrastructure rather than implementing a lot of integration and contingency plans.

Through rapid acquisitions as mentioned, Accenture is been criticized as growing inorganically and having an inadequate team of human talents. On the flip side, on top of expanding its digital capabilities, these acquisitions allowed Accenture to broaden its client pool and geographical coverage to great extents.

Accenture SEC Filings 10-Q

Consulting service companies, is known as one of the most prestigious field to work at because of its dynamics and untraditional lifestyle. Most assets of the companies are cash & cash equivalents and goodwill, some of them own real estates. However, they do not have as much PP&E as other companies do. The biggest revenue driver is the service of the company, which includes technology capabilities, sector coverage and most importantly the human capital.

Relationship management is particularly important at consulting industry, through all these 53 acquisitions, Accenture would really need to maintain their employees level of professionalism and capability of performing complicated tasks. Or else, Accenture’s reputation may get damaged to any way from existing clients or employee’s complaints. It stands out as one of the biggest risk Accenture would have to face currently, the tangible incremental benefits of the technology capability will not be recognized unless they client-facing associates are well-trained and are able to facilitate a great culture as well.

Accenture to myself is exceptionally special as it sets itself far away from traditional consulting services. The alumni presence at the firms have taught me more about the firm as I was able to talk to the associates and consultants. Next week I will be talking about coronavirus from two perspectives, public health and financial market.

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