In sync with its strategy of growing through acquisitions, Accenture Plc (ACN - Free Report) recently announced that it has entered into an agreement to acquire IBB Consulting — a strategy consulting firm. However, financial terms of the deal remain undisclosed.
About IBB Consulting
Founded in 2001, IBB Consulting helps organizations across communications, media and technology develop market strategies. The company, with approximately 160 highly-skilled professionals, as well as immense experience in business planning, strategy, technology and execution, assists organizations in successfully executing business operations, develop business models, and create new products and services.
It operates in North America and Australia, though the majority of its professionals work in North America. The Philadelphia-based strategy consulting firm served big companies like Comcast Corporation (CMCSA - Free Report) and Verizon Communications Inc. (VZ - Free Report) .
How Will Accenture Benefit from IBB Buyout?
Accenture intends to integrate IBB Consulting’s business into its Accenture Strategy division. The target company’s employees will join the integrating division upon successful completion of the acquisition.
With this acquisition, Accenture will not only get a large talent pool, but will also gain a huge customer base as well. This acquisition will also strengthen Accenture’s presence in the communication, media and technology (CMT) consulting market, as well as help gain higher market share.
Per the company, the above discussed buyout is likely to enhance Accenture’s “ability to deliver deep, industry-specific strategies for our clients by helping them define and deliver a new breed of capabilities that drive competitiveness, reduce costs, leverage emerging technologies and expand operational excellence to put them atop the intersection of business, technology and operations.”
The demand for network technology is on the rise as telecom companies have accelerated the deployment of 5G networks and cable operators, moving into the wireless space. Furthermore, media companies are making digital transformation in their internal operations, as well as bringing in technologically advanced new products. Here the buyout of IBB Consulting will help Accenture in advising its clients as the former has expertise in both these areas.
Accenture stock has gained 12% year to date, substantially outperforming the 10.7% growth in the industry it belongs to.
Acquisitions – Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far in 2017, the company has either completed or signed over 15 acquisition deals across various business segments, including Altitude, Genfour, SinnerSchrader and New Energy Group. Last year, it completed or signed about 12 acquisition deals across various business segments, such as IT security, CRM capabilities and strategy consulting. In 2015, it closed 21 takeovers.
These acquisitions have enabled Accenture to set foot in newer markets, diversify and broaden its product portfolio, and maintain a leading position in the market as well. A strong cash balance of $3.38 billion and an operating cash flow of $1.79 billion at the end of third-quarter fiscal 2017 are anticipated to support Accenture’s inorganic growth strategy.
Accenture’s long-term prospects look promising due to its sustained focus on innovative product roll outs, consistent investments in enhancing digital and marketing capabilities, and major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.
Additionally, the company is focusing on building partnerships which is helping it in foray into newer markets, diversify and broaden the product portfolio. Most recently, Apple Inc. (AAPL - Free Report) and Accenture joined forces to create a mixed team of designers, programmers, and other Apple experts, within Accenture Digital Studios units in select locations around the world.
Currently, Accenture carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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