In the fourth in our series about how faculty member firms’ approach M&A and growth, head of innovation and investments Shamus Rae explains how KPMG uses acquisitions to bring in skills and increase profitability.
How does M&A fit in with your general plans for growth?
Acquisitions are an important part of our growth strategy – both globally and locally. We tend to pick up specific or emerging skills or assets through acquisitions. We do not look to acquire market share. If you look across the published accounts of the main advisory firms, you will notice that revenue per employee is not keeping up with inflation and profit per employee has been in decline across all the big advisers – so we do not want to continue that dilution of our profitability by acquiring large numbers of people in legacy skills areas. The majority of what we are looking for is asset-based and tech. In the UK we made six acquisitions over 2014/15, and are on something of a pause while we integrate those. Among them was Qubera, a fibre organisation, software business Crimsonwing and Nunwood, which is on the cusp of the analytics space.
How big a part do acquisitions play in your revenue growth?
Acquisitions are targeted in areas where we want to grow. Most are in service areas that are in rapid growth, in any case. In 2015/16 we had £1.7bn of revenue in the UK. The new acquisitions will not show on radar for revenue immediately, but they will have rapid growth over three to four years and will have a greater impact on our profitability as a proportion.
Members of the Corporate Finance Faculty and Faculties Online
Full article only available to Corporate Finance Faculty members and subscribers to Faculties Online.
If you would like to read this article in full why not join the Corporate Finance Faculty and gain member access to all member only content.