Accenture (ACN) to Buy Aviation Consultancy Firm Seabury
Continuing with its strategy of growing through acquisitions, Accenture Plc ACN recently announced that it has entered into an agreement to acquire Seabury Group – a strategy consulting firm – that mainly focuses on the aviation industry. However, the financial terms of the deal have not been disclosed.
About Seabury Group
Founded in 1995, Seabury Group is best known for providing strategic planning and cost reduction solutions to distressed aviation companies. Through its strategic consulting services, the company helps aviation companies in managing fleet, network, commercial, maintenance, airports and cargo in a more planned and cost effective way. It also helps organizations to make improvements in their human capital.
Through a combination of its industry expertise, analytical techniques, data and proven tools, Seabury has provided its services to over 300 clients across 50 countries. A few of its major clients include Azul Airlines, TAP Portugal, Monarch Airlines, and Etihad Airways.
Headquartered in New York City, the company has offices in the United States, Europe and Asia. Seabury Group currently has employee strength of 120.
Rationale Behind Acquisition
Accenture intends to integrate Seabury Group’s business into its Accenture Aviation Practice division and expects the target company’s employees to join the integrating division upon successful completion of the acquisition.
By integrating Seabury Group, Accenture will not only get a large talent pool but will also gain a huge customer base. Therefore, we believe that this acquisition will strengthen Accenture’s presence in the Aviation consulting market and also help it to gain more market share.
By combining Seabury Group’s corporate advisory and consulting businesses with its global capabilities, Accenture thinks that it can help airline companies in making a digital transformation at a much accelerated pace.
Group chief executive of Accenture’s Products operating group, Sander van ‘t Noordende said, “With digital transformation forcing the aviation industry to rethink its business and operating models, we expect continued strong demand for consulting services in this industry. This acquisition will enhance our ability to accelerate the pace of transformation our clients need and to deliver the industry-specific strategies that our clients are increasingly seeking to drive competitiveness and differentiation.”
Therefore, we believe that the buyout will expand Accenture’s capabilities in providing end-to-end strategy consulting services to the airline companies. It will also help it to gain more market share, thereby boosting its top-line performance.
Acquisitions – A Key Growth Strategy
Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. Last year, the company completed or signed about 12 acquisition deals across various business segments, including IT security, CRM capabilities and strategy consulting. In 2015, it had closed 21 takeovers.
These acquisitions have enabled Accenture to foray into newer markets, diversify and broaden its product portfolio, and maintain its leading position. A strong cash balance of $4.08 billion and an operating cash flow of $1.08 billion at the end of first-quarter fiscal 2017 are expected to support Accenture’s inorganic growth strategy.
Bottom Line
Accenture’s long-term prospects look promising due to its sustained focus on new and innovative product launches, continuous investments in enhancing digital and marketing capabilities, as well as major acquisitions. Moreover, we believe that regular acquisitions will significantly contribute to the company's revenue stream.
Notably, shares of Accenture have been trading in line with the Zacks categorized Consulting industry over the past one year. The stock generated a return of 13.1% almost matching the industry’s gain of 13.7%.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks in the Consulting Services industry include Gartner Inc. IT, Hill International Inc. HIL and NV5 Global Inc. NVEE, all carrying a Zacks Rank #2 (Buy). Gartner, Hill International and NV5 Global have long-term earnings per share growth rate of 17.3%, 25% and 20%, respectively.
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Gartner Inc. (IT): Free Stock Analysis Report
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Hill International Inc. (HIL): Free Stock Analysis Report
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