The prospects for professional services firms are strong as companies increasingly seek specialist expertise. Private equity can help firms in the space to cater to growing demand by helping them scale, enhance digitally, and expand their geographic footprints.
Firms offering so-called “mission-critical” services are relatively shielded from budget cuts as the spend is deemed essential rather than discretionary. This is particularly the case for businesses providing services in complex areas which customers are required to outsource.
Despite today’s headwinds, many of these firms are catering to growing demand, and may be looking to scale their own business as a result. Enhancing digital capabilities is high on lists for many – particularly traditional services firms looking to evolve into tech-enabled territory – yet it can be a challenge. Building out the team to accommodate this and other growth strategies is a key step, but can be tricky to get right. An external funder can bring capital, experience and intent to drive change in what are often conservative environments.
Additionally, the benefits of scale are becoming more evident in parts of the sector and so many mid-tier firms are looking to be part of the consolidation trend rather than get left behind, so they may look to private equity to realise that goal.
Professional services firms continue to enjoy high demand, but the bar has been raised in today’s backdrop. To remain competitive, firms need to offer a truly differentiated service which adds meaningful value. Doing this requires a refined value proposition, and boosting offerings through expansion into new geographies or verticals can really drive growth.
Inflexion has significant experience of working with a number of businesses in the sector to help them achieve their ambitious growth plans, including:
CMSPI - In March 2021, CMSPI and Inflexion agreed a minority partnership to help accelerate the firm’s growth. The merchant payments adviser had been running strong for a decade, and management knew the data CMSPI had built up was capable of more through digital enhancement.
dss+ – Inflexion agreed to acquire dss+ in February 2023, making it a very fresh partnership. Management and Inflexion are working together on the first 100 days, with plans to accelerate growth both on an organic and acquisitive basis.
LCP – The four-year collaboration between Lane Clark & Peacock and Inflexion was driven by management and supported by Inflexion’s Partnership Capital and saw revenues grow by 45%.
Wood Thilsted – In 2022 Inflexion completed an Enterprise Fund investment in Wood Thilsted, a global engineering consultancy to offshore wind farms, a key driver of the global transition to renewable clean energy.
Since its 2021 investment, CMSPI has introduced new products and services which are helping the business scale rapidly with the support of Inflexion to develop technology and introduce automation. Adopting a digital product-centric mindset was key, and Inflexion introduced one of its Digital Associates to CMSPI to assist with this. The firm has taken an iterative approach to build on its wealth of data to create products aimed at both internal and external users, working closely with its customers to test ideas and improve with each iteration.
Just as CMSPI’s success since inception has been based on its people, the right talent is needed for its current sprint. Inflexion has used its network and experience to help build out the CMSPI leadership team to ensure it’s capable of grasping the immense opportunity ahead.
An experienced Chair was appointed from Inflexion’s Network shortly after the ink dried on the 2021 partnership. John Kerr’s experience in Big 4 consultancy makes him well placed to marry the importance of scaling data and investing in people to get the best from businesses. “Data can help free humans from certain tasks and focus on those which are more rewarding – for the business as well as themselves as people,” he says. “This in turn could help firms focus (hu)manpower on enhancing customer experience in the business rather than more repetitive activities.” For CMSPI, it is enabling the introduction of new products and services so the firm can access new markets and customers.
Inflexion’s Digital team are heavily involved in CMSPI’s new product development despite being minority shareholders. “I wanted to bring in a partner with the expertise to help us develop the tech to empower our clients. It’d be a big leap, but it could really pay off. Inflexion are the perfect partner for that,” CEO Brendan Doyle recalls.
In February 2023, Inflexion agreed to acquire a majority stake in dss+, a leading provider of operations management consulting services with a purpose of saving lives and creating a sustainable future.
dss+ is a global business headquartered in Switzerland that supports clients to reduce risk, transform culture, maximise impact and improve sustainability by operating more responsibly. The business is primarily focused on consulting to high-risk industries where safety, culture transformation, operations and sustainability services are mission critical.
The firm was founded in 1968 as the consulting arm of DuPont de Nemours and was carved out in 2019 as DuPont Sustainable Solutions in a management buy-out supported by Gyrus Capital, which is reinvesting in dss+ as part of this transaction.
dss+ aims to enhance its offering to its global blue-chip client base through new solutions development, an expanded footprint and additional talent. The firm will also work with Inflexion to consolidate a fragmented market.
Lane Clark & Peacock (LCP) is a leading independent consultancy specialising in pensions, investment and insurance and in 2016 it partnered with Inflexion to enable the partners to take back control from LCP parent Alexander Forbes, a pan-African financial services group.
Management were drawn to Inflexion’s experience in partnering with professional services businesses, as well as its genuine minority capital offering. As LCP wasn’t seeking transformational change, Inflexion took the time to really understand the strengths and opportunities of the business.
Thereafter followed four years of impressive but measured growth. A Chair was appointed from a shortlist devised from Inflexion’s network, with the strategic lens that brought really helping with focus. The management structure was updated to support growth, succession planning and developing talent. This saw the number of members in the partnership grow around 30% during the four-year investment. The teams worked together to invest in faster-growing areas such as technology analytics, health analytics; and energy market modelling, building on its core skillsets, to support continued growth for the business and career development for its partners and staff.
The growth was further underpinned by LCP’s market positioning: already consulting with 50 of the FTSE 100 companies, LCP enjoyed strong repeat spend, and was operating in a shifting market where clients increasingly sought expert independent and conflict-free advice.
Overall the partnership saw revenues grow 45%, headcount grow by a third and LCP’s assets under advice increase by 150%.
“It was a truly collaborative working relationship with Inflexion and we valued their ability to get quickly involved in the detail when necessary but also take a high level, strategic and pragmatic view when it was the right thing to do,” said Aaron Punwani, CEO at Lane Clark & Peacock LLP.
Wood Thilsted is a leading global offshore wind engineering consultancy. Founded in 2015, the company designs the foundations for some of the world's largest offshore wind farms.
The company operates in all the major wind energy markets of the world, providing its services to many of the leading wind developers, and is currently working on the three most significant wind development projects globally. The firm employs over 140 people in five countries.
Inflexion is supporting Wood Thilsted in various ways, with the Commercial team supporting a focus on key account management to maximise revenue per client, while Inflexion’s in-country experts are helping Wood Thilsted to grow internationally. Over half of Wood Thilsted’s projects are in the US over half their projects, with others in the UK, Japan and Taiwan.
“None of us have scaled an international business before so getting Inflexion on board is incredibly valuable. Their investment and advice will help us achieve our global goals, but leave us firmly in charge of our own destiny,” says Christian LeBlanc Thilsted, CTO & Co-Founder, Wood Thilsted.