BUSINESS SERVICES M&A TRENDS: SPRING 2020

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    Meridian Capital’s Business Services M&A Update covers the market impact of COVID-19 on business consulting, professional services, IT consulting & staffing

    Introduction

    A well-known technology columnist, once said, “Consultants must find a niche and stick to it. If you can’t find one, create one.”

    The era of COVID-19 is creating new problems and re-prioritizing existing ones. Many companies are facing both economic challenges and operational challenges and are needing to navigate them quickly and virtually. Unique dynamics like the current one can often leave an open door to problem solvers and refreshed service offerings that might not have received the appropriate amount of attention previously.

    At Meridian, we continue to believe that the consulting and professional services industry, particularly firms focused on digital transformation, will be well positioned as the business environment moves toward an eventual recovery. While many clients’ priorities will shift, causing canceled or delayed projects, many projects will continue to move forward with more priority than before. Professional services firms that have already embraced digital transformation as part their offerings, will continue to be very well positioned.

    On the client side, the surge in demand that COVID-19 has created on cloud infrastructure, remote working solutions, and ‘connectivity technology’ generally has exposed potential inefficiencies and shortcomings. Companies undergoing digital transformations are responding quickly to the short-term impacts of the slowdown but remain largely committed to longer-term plans or initiatives. In a survey regarding new technology investments, ISG Research reported over 60% of companies have merely delayed technology rollouts 90 days and nearly a third of respondents indicated no change to plans at all.

    We anticipate that professional service firms and consultancies with established solutions across digital transformation services will continue to remain attractive to buyers, both financial and strategic.