Newsletter

Welcome to our Newsletter.  Despite the current market problems we have enjoyed a busy year completing three sale projects and one acquisition project.

 

Microsoft Enterprise Technologies

 

Over the last year or so, the Microsoft (MS) Enterprise technologies space has been particularly lively with active buyers and sellers.

 

In September, AIM-listed business and information technology consultancy Charteris, advised by The Difference, acquired business solutions consultancy SIG Consulting Ltd.  SIG, a Microsoft Gold Partner, specialises in Enterprise Resource Planning (ERP) solutions mainly based on the Dynamics AX platform, and has a particular focus on the logistics and service sectors.  Combining the Dynamics and CRM expertise of Charteris with SIG and their complementary client bases significantly strengthens Charteris in the ERP marketplace.

 

Apart from the MS Dynamics products NAV and AX, MS CRM and SharePoint skills are in great demand, and even small MS Partners with these skills attract attention.  The Difference handled the sale of a business solutions house with MS CRM skills earlier this year and attracted four offers in a competitive situation.

 

Despite the current gloom, this sector looks set for continued M&A activity as we are aware of a number of active buyers and sellers in this rapidly consolidating market.

  

The Market View

 

During the first three quarters of 2008, the number of deals and valuations has held up well though there was a slight decrease in deal volume in Q2 and an 11% decrease in Q3 – not as bad as we feared!  Total consideration declined 22% though this reflects the sharp decline in very large deals.

 

Prices for small and medium sized deals have generally been maintained within the recent historic range.  Private Equity and trade buyers are still paying ‘fair value’ for acquisitions with average deal price/earnings quite stable.  This contrasts with public company valuations which have plummeted.  

 

It is very difficult to know how the volatility of the financial markets and the deep problems of the financial sector will affect deals in Q4 and into 2009 but there is strong evidence that deals are taking longer to complete. Our activities in the retail and distribution sectors, for example, bear this out; and it is also proving challenging to attract buyers - probably because of the difficulty in raising finance.    We are seeing bottom fishers re-entering the market seeking cheap deals, but there is a reluctance to sell cheaply unless there are real problems; most prospective sellers seemingly prepared to wait until there is more clarity in the market. 

 

On the other hand “high value-add” sectors such as outsourcing are still commanding premium prices in the small to medium market.  We are aware of a number of companies with cash resources whose strategy is to grow by acquisition and they are still actively seeking suitable acquisition targets at fair prices.

 

The Difference Team continues to grow and has completed over 60 M&A transactions and over 60 strategic advisory projects.  Please contact us to discuss your strategic requirements, including Exit Planning, Acquisitions and growth strategy or simply if you wish to work out the next steps in maximising shareholder value.  

Fall 2008