Private equity (PE) firms are still taking a strong interest in Europe’s specialist consulting shops thanks to a perennial combination of recurring revenues and high margins, even though deal volumes have dropped.

In June, for example, KKR secured a 67% stake in information technology (IT) consultancy Datagroup, following an offer that it launched in April. The company has a market capitalisation of EUR 513m.

Although generalist consultancy firms have struggled over the last five years, specialist consulting is “a different story,” according to Richard Holden, partner and head of business services at Alantra.

Geopolitical uncertainties, such as Brexit and US President Donald Trump’s on-and-off tariffs announcements, combine with developments in tech to create demand for these services, Holden said. “Work in political advisory and intelligence is also growing,” he said.

Inflexion is a mid-market private equity (PE) firm with a track record in European business services.

“We like investing in niche consulting firms with a real value-add mission-critical service that has strong barriers to entry,” Isabelle Pagnotta, partner at the firm and its head of business services, told Mergermarket.

“We also like investing in consulting firms in an energised market with positive tailwinds such as sustainability, health and safety,” Pagnotta said.

In January, Inflexion took a minority stake in the Dutch arm of Baker Tilly, the accounting and advisory group. The target registered EUR 150m in revenues in 2024.

This strong demand among sponsors for assets operating in Europe’s accountancy, auditing, boutique advisory, consultancy, investment banking and financial advisory space means that aggregate deal volumes have been above EUR 1bn in the year-to-date (YTD) period for 15 of the last 25 years, including the last seven years in a run, according to Mergermarket data.

Volumes have slipped a little in YTD25, while remaining above this threshold. Some 288 deals worth a combined EUR 1.4bn have been announced so far, compared to 322 transactions worth EUR 1.8bn in YTD24.

The high watermark came in YTD00 with 271 deals worth EUR 15.3bn, followed by 291 deals worth EUR 7.0bn in YTD21.

Continental action

Deal activity is particularly strong in Continental Europe. Players in the region tend to understand professional services as an investment class, Holden said. “There are more opportunities now.”

Mergermarket intelligence has highlighted a number of names to watch in the space. One noteworthy opportunity is the German wing of Baker Tilly, which is working with Rothschild to sound out strategic options.

Meanwhile in France, artificial intelligence (AI) expert Artefact is in the final round of an auction that has attracted sponsor interest.

Across the Channel in the UK, H.I.G. Capital has been fielding bank pitches for a potential exit from restructuring advisory firm Interpath Advisory, as reported in June.

Some situations might take longer to emerge. For example, intelligence provider GlobalData has terminated intelligence talks with both IGC and KKR. The board is betting instead on a three-year Growth Transformation Plan with a target of annualised revenues of GBP 500m by the end of 2026.

Although overall volumes have dropped, European PE executives will always be ready to open their chequebooks for specialist consultancies at the right price.