29 March 2017
Settle down now – its not going to happen, is it?
Working in the world of M&A we can all get transfixed by the markets, categories and segments…. and of course, the numbers. We are all involved with that on a daily basis. In fact, that is very much part of our job. Know your category – understand the companies – identify the trends – keep ahead of the curve, and so on and so forth. I can’t remember all the many board level meetings that I have been involved in where – think outside of the box, let’s be expansive, imagine the impossible – have all been mantras at various times. Very few of the ‘’opportunities’’ written on that white board get expanded and followed up – yet alone materialise or come to fruition – but it certainly can be fun, and let’s face it is necessary to do from time to time.
What we have seen and are continuing to see however is what we at Ciesco describe and position as ‘’calculated encroachment’’. Calculated, as in being seriously strategically planned and considered. Encroachment, as in entering or invading (wow, that sounds aggressive) someone else’s space or territory. No one has a given right in whatever their business category happens to be, to be able to say – ‘’You can’t enter here, this is my domain, you don’t do the kind of stuff that we do’’ – even when a company is potentially sniffing around an opportunity where they have no direct experience of a particular category, market or territory. In acquiring a company that can fit your strategy, extend your capabilities and expand your opportunities you can realise the potential that you have detailed and have had approved in your overriding commercial or business plan objectives.
Accenture Interactive getting into the strategy and creative arena by acquiring Karmarama last November shocked all but on reflection, surprised less. Their client base needs those services and will be getting them from various agencies anyway. Here is an opportunity to secure more of the income pie and gain greater traction with and confidence from existing clients.
And now we have a potential deal involving Oracle acquiring Accenture. Whilst this clearly highlights a business fit that both triggers an offensive and defensive strategy, it is the actual sheer size of the financial deal that gets the attention of the marketplace.
A deal for Accenture is almost certainly going to be a much bigger deal for Oracle. The company has recently posted net revenues growing at 6% up to $8.3bn and operating income is also up by the same amount to $1.14bn.
It’s a lot of money but it could well be worth it as it can help fulfil Oracle’s new found cloud first approach. Oracle has been placing a much greater emphasis on its cloud business over the past couple of years but it still falls way behind the clear market leaders Amazon Web Services and others including Microsoft, Google and IBM.
Accenture works of course with most Oracle’s rivals and that includes IBM, SAP, Salesforce, AWS. Through acquisition, surely something must give.
This all needs to be considered well in advance of this deal getting on the straight road to completion. Will it? We will just have to wait and see.
Ciesco tracks global M&A activity within the media, marketing, and related technology sectors throughout the year and publishes the key findings in an annual report in partnership with Experian. The report showcases Ciesco’s analysis of deals by volume and disclosed value, geography, and sector, together with an overview of the buyer landscape and private equity activity, revealing the key insights and trends, as well as an outlook for these sectors.
For a copy of the full 46-page report, including detailed analysis on:
- Deal statistics, volumes, values
- Notable deals
- Buyer landscape
- Emerging buyers
- Private equity activity
- Geographic overview
- Cross-border activity
- Ciesco’s outlook
Please contact firstname.lastname@example.org.