While M&A in consulting has taken a hit from the Covid-19-induced downturn, a new report from Boxington Corporate Finance says that deal making activity has recovered over the past months, as the sector emerges as a counter-intuitive beneficiary of the global pandemic.
As Covid-19 arrived, valuations across the consulting sector were particularly hard hit, with investors expecting the sector to be exposed to the pandemic given the service-based nature of consulting work and its reliance on onsite meetings and delivery.
Despite the fears, the sector has proven resilient and its valuations are now well on the road to recovery, with average quoted company share valuations increasing by circa 31% in the past six months to 30th September 2020, and in some cases even surpassing pre-Covid valuations. To come to its finding, Boxington Corporate Finance analysed a cross-section of 20 global listed consulting firms, including Accenture, Booz Allen Hamilton, Capgemini, FTI Consulting, Wavestone and Wipro.
According to the researchers – Tim Evans, Alex Cooper and Satnaam Kaur Virdee – the recovery has been driven by two key factors. Firstly, new client demand for Covid-driven change and transformation projects as companies seek to re-adjust operating models and achieve cost efficiencies.
Other services seeing high demand include supply chain (managing risks, volatility and redesigning supply chains), procurement and human resources (cost cutting and reorganisations), working capital management (freeing up cash), restructuring (due to the growing number of administrations and companies facing financial hardship) and M&A (in