Interest in Professional Services firms from investors, strategic acquirers and financial sponsors has steadily increased over the past decade, leading to significant multiple expansion across the industry.
The recent acquisition of Duff & Phelps by a consortium for $4.2bn represents the fourth time this firm has been bought by a Private Equity Fund. It also represents the firm's second sale in two years when Permira's acquisition bought the global advisory firm 2018 for $1.75bn. Against this backdrop, strategic acquirers are pursuing M&A for a multitude of reasons. Firms that are focused on technology solutions are acquiring strategy capabilities and vertical industry expertise as a way to create stronger relationships with clients and move up the value chain. Conversely, strategy-focused firms and vertically oriented consulting firms are looking to add digital transformation capabilities to address a critical need at their clients and capture a larger piece of the client’s spending.
Duff & Phelps, the global advisor that protects, restores and maximises value for clients, today announced that a global investor consortium led by funds managed by Stone Point Capital and Further Global has agreed to acquire Duff & Phelps for $4.2 billion. The equity sellers include the Permira funds, which will continue to hold a significant stake in the company as part of the consortium. As part of the transaction, the Duff & Phelps management team will maintain a meaningful equity stake in the firm and continue to lead the company. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2020.
Duff & Phelps advises clients in the areas of valuation, corporate finance, investigations, disputes, cybersecurity, compliance and regulatory matters, and other governance-related issues. With the acquisitions of Kroll in 2018 and Prime Clerk in 2019, the firm has approximately 3,500 professionals located throughout offices in the Americas, Europe and Asia. The firm’s longstanding client relationships include nearly 50 percent of the companies in the S&P 500, 65 percent of Fortune 1000 companies and 70 percent of top-tier private equity firms, law firms and hedge funds.
Noah Gottdiener, Chief Executive Officer of Duff & Phelps, commented, “This partnership marks a vote of confidence in the long-term growth of Duff & Phelps. We are grateful to Permira and are thrilled that they will continue to be investors. We are also excited to have the backing of Stone Point Capital, Further Global and a world-class group of investors. Most importantly, I, along with company President Jacob Silverman, wish to thank our 3,500 Duff & Phelps colleagues who have worked tirelessly to make this company a success.”
“We are thrilled to have the opportunity to partner with Duff & Phelps again and participate in the next phase of growth for the company,” said Chuck Davis, Chief Executive Officer of Stone Point Capital. “The firm maintains a strong brand position and an outstanding entrepreneurial culture that will drive its continued success. We look forward to working closely with Noah, Jake and the rest of the team as we help them realise their strategic vision.”
Olivier Sarkozy, Founder and Managing Partner of Further Global, added, “I am delighted to be reunited with Stone Point and the Duff & Phelps management team as we work to continue to build upon the incredible global franchise that Duff & Phelps has become.”
Nic Volpi, a Partner at Permira, commented, “Since the Permira funds’ 2018 investment in Duff & Phelps, the company has meaningfully expanded its capabilities through the strategic acquisitions of Kroll and Prime Clerk. The transformation of Duff & Phelps, over the last two years, is a testament to the strength and talents of Noah, Jake and the entire executive team. From day one, we’ve had a deep and collaborative partnership, and we look forward to the team’s future success.”
Daniel Brenhouse, a Permira Principal added, “There are still tremendous opportunities ahead and we are pleased to support Duff & Phelps’ continued global expansion as part of the investor group.”
Full press release available at https://www.duffandphelps.com/about-us/news/duff-and-phelps-acquired-by-global-investor-consortium