P2 Consulting and Certeco merge to accelerate growth ambitions

UK consulting firms Certeco and P2 Consulting have agreed a merger in a move that will create a combined firm with a headcount of around 260 consultants and project managers. The private equity backed deal between Certeco, a business technology change consultancy, and P2 Consulting, a programme management specialist, aims at bolstering combined offerings and at accelerating international growth.

The deal follows five months after P2 acquired FS101, a financial crime consulting firm, and eight months after the company completed a management buyout to “turbocharge” its growth. In December last year, P2’s Managing Director, Douglas Elliott, unveiled that Lonsdale Capital Partners, a private equity firm focused on the lower mid-market*, supported the management buyout of the project management consultancy business with the goal of accelerating the team’s ambition to make P2 the “world’s leading project and programme management company”.

Commenting on the transaction back then, James Knott, Director at Lonsdale Capital Partners, said: “In P2, we are backing a business with a very impressive proposition which resonated with us. P2 is extremely well placed to take advantage of increasing demand that is driven by governmental, regulatory, market and business change; and Brexit will, we believe, offers an opportunity to the company.”

Founded in 2013, P2 has grown significantly year-on-year, and currently generates revenues of around £11 million from its portfolio and project management services, delivered principally to clients in the financial services and consumer/retail sectors. The addition of FS101, led by founder Phil Rolfe, bolted-on significant expertise in anti-money laundering and cybercrime – two areas which are among the fastest growing segments of the consulting industry. “Over the past few years, anti-money laundering, financial crime and regulatory change has become increasingly important to our clients,” explained Elliott.

Specialised change management consultancies

The merger with Certeco – a player three times the size of P2 – creates a company with a team of around 260 consultants, generating a turnover of £30 million (€34 million), which places it, according to Elliott, among Europe’s largest specialised change management consultancies. “There are very few businesses in the UK or Europe with the breadth and depth of specialist services that the combined business now provides,” added Knott. 

The deal between the two consulting firms – both headquartered in London – was brokered by Equiteq, a global provider of M&A services exclusively to consulting and IT services firms. Earlier this year, Certeco approached Equiteq to support it with finding an investment partner to further accelerate growth. Recognising the synergy between Certeco and P2 – Equiteq, in fact, supported P2 Consulting’s buyout in 2016 – the two firms were brought together for negotiations, with the deal successfully closed on Tuesday September 26, 2017. 

“Having worked with P2 and Lonsdale in the past, we were uniquely positioned to advise Certeco on the merger. The two teams are highly complementary in terms of their market offering – combining them into a single, enlarged entity will undoubtedly drive more rapid value creation,” remarked Ed Groome, Director, who led the Equiteq team working on the engagement. 

Pip Peel, one of the original founders and Chairman of P2, added: “This is a great deal for us and we’re excited by the opportunities the enlarged business creates. Equiteq were instrumental in brokering the deal and getting it over the line – it’s a great deal for all parties.” 

M&A in the management consulting industry has been on the rise since 2013, according to Equiteq data, as industry players are pushing for consolidation to meet changing client demands, and are acquiring peers in booming areas such as technology, cybersecurity and design. Among major deals closed in recent weeks are RGP’s pick up of taskforce (in Germany), Parthenon-EY’s purchase of OC&C France and the acquisition of UK based Credo by US group Teneo. Equiteq itself was involved with another prominent UK deal in Q2 this year, guiding outsourcing consultancy Aecus through its sale to The Hackett Group.

Challenging the top consultancies

Together, the two parties believe they are better positioned to battle against the top firms in the market, including the likes of the Big Four. Certeco helps clients with delivering business change programmes, with a focus on business restructuring, regulation and digital change. P2 Consulting, in turn, provides senior project management support to blue chip clients. “P2’s and Certeco’s services are so complementary. Together, we will be able to provide a much broader range of consultancy services to the market and become a real contender to the big consultancies,” said Elliot, who has been appointed CEO of the newly formed company.

Asked about the cultural fit between the two – an aspect that in many well-known cases has been a dealbreaker for integrations in the consulting landscape – Peel  said, “When Equiteq introduced them to us, it was apparent the strategic and cultural fit would be beneficial to both organisations.” 

The move will also pave the way for accelerated growth, not just in the UK, but also internationally. In recent months, P2 Consulting already expanded into America with the opening of three hubs, based in New York, Los Angeles and Phoenix, adding to its UK footprint in London and Edinburgh. Besides its base in London, Certeco has offices in Ipswich, Liverpool and Glasgow. Joining forces, with further backing of Lonsdale from its debut institutional fund, which closed on £110 million in April 2016, the two consultancies will embark on a ‘buy and build’ strategy to expand the firm’s international footprint.

“The transaction with P2 comes at just the right time in our growth trajectory”, remarked Augusto Negrillo, formerly Chief Executive Officer of Certeco.

Groome concluded, “Certeco and P2 Consulting have a highly synergistic service offering and a complementary blue chip client base, so it was clear to Equiteq that, together, a combined business would more rapidly accelerate to achieve the strategic objectives of all parties.”

* Lonsdale was founded in 2009 by Alan Dargan, Ross Finegan and David Gasparro.