Buy-outs, mergers and takeovers set to continue

Merger and acquisition is now widely accepted as an integral part of corporate growth strategy in the consultancy and engineering sector and further consolidation of the industry can be expected in the near future, says Nelson Ogunshakin.

Over the past ten years, the consultancy and engineering industry has seen several waves of merger and acquisition activity. It has been viewed by firms as a viable path to business growth and success, no matter what the size of the company.

With continued market shifts, as well as changes in the composition of our industry over recent months, it is perhaps unsurprising that towards the end of last year I identified market consolidations as one of the five key topics to keep an eye on in 2017. 

Business leaders and chief executives are charged with ensuring the progress and profitability of their companies. That is our role, to adapt to the current business environment and lead our teams to success. 

While organic growth is depended upon for day-to-day success, the average business can begin to plateau in its annual rate of growth due to lack of resources. For the UK industry, this does not usually mean decline, but rather untapped potential. And it is in such circumstances, or when significantly increased yields are desired by shareholders, that mergers or acquisitions can provide sound growth solutions. 

Big data and digital economy, which I discussed in these pages in March, means that for a business, distance is no longer a limiting or defining factor. Once a business is listed, it is a globally accessible company. If it can be bought in the UK it can also be bought from elsewhere, creating global growth opportunities for the business.

Mergers and acquisitions are also a crucial way for investors or shareholders to spread out risk, build and diversify portfolios, and gain skills. With the fluctuations in our industry landscape, it has become clear that particularly in cases of listed businesses, it is less about who owns what or the size of an organisation. 

It is all about what you do with the organisation. It is about your leadership, culture, business drivers and how that forms the organisation that adds value to your shareholders, delivers client satisfaction and is a place where skilled staff want to work.

There will be more market shifts going forward and there will undoubtedly be more instances of mergers or acquisitions. Our industry is still growing and companies will continue to make the strategic decision, with the potential for higher yields, that they are better together. 

We at ACE will continue to provide platforms, such as the European CEO Conference or webinars, for discussing optimal merger and acquisition practices, assessments to undertake, risks to account for, achieving business synergies and other topics that will continue to arise from new market shifts.

Merger and acquisition is now widely accepted, by both SME and large companies, as an integral part of corporate growth strategy in the professional consultancy and engineering sector. With constant pressure on CEOs and business leaders to de-risk and seek diversified business portfolios, both in terms of sector and geographic reach, I expect to see further consolidation of the industry in the near future.

Dr Nelson Ogunshakin OBE is the chief executive of the Association for Consultancy and Engineering.