Equiteq’s 2017 global survey of buyers of knowledge-intensive services businesses found an increasing appetite for transactions, with buyers expecting to initiate on average 10 acquisitions each over the next three years.

IT services and management consulting companies expect to be the most prolific acquirers, initiating close to 12 acquisitions on average. The average size of targets is also expected to increase in 2018, with optimal revenues of targets rising by over 50% to $62.6m.

The annual, independently conducted survey of Management consulting, IT consulting, Media and Marketing, Engineering consulting and HR consulting buyers found that market convergence continues to be a key trend as buyers look to diversify.

David Jorgenson, CEO, Equiteq, comments: ‘This continued convergence across consulting segments means that although sellers can attract premium valuations for synergies, they are less likely to come across their optimal buyer in the normal course of their business.’

Strategic acquirers show an increased appetite for acquisitions and are prepared to pay increased multiples for the right levels of margin and revenue growth.

Buyers highlighted a quality management team, differentiated market proposition, long term client relationships and repeat client revenue as major considerations for evaluating a target.

Across the eight levers of firm quality, the research found that sellers could do a lot more to achieve optimal valuations: