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Accenture (ACN) Closes Strategy Consultancy Firm IBB Buyout

Zacks

Accenture Plc ACN recently announced that it has completed the acquisition of IBB Consulting, a strategy consulting firm. Notably, the two companies had entered into the buyout deal last month. However, financial details of the transaction remain undisclosed.

Founded in 2001, IBB Consulting helps organizations across communication, media and technology develop market strategies. The company, with approximately 160 highly-skilled professionals, as well as immense experience in business planning, strategy, technology and execution, assists organizations in successfully executing business operations, develop business models, and create new products and services.

It operates in North America and Australia, though the majority of its professionals work in North America. The Philadelphia-based strategy consulting firm served big companies like Comcast Corporation CMCSA and Verizon Communications Inc. VZ.

Strengthens Presence in CMT Consulting Market


Accenture has integrated IBB Consulting’s business into its Accenture Strategy division. With the successful completion of the acquisition, the acquired company’s employees have joined the integrating division.

With this acquisition, Accenture not only got a large talent pool, but has also gained a huge customer base as well. This acquisition has further fortified Accenture’s presence in the communication, media and technology (CMT) consulting market, and is believed to help it gain higher market share.

Greg Douglass, senior managing director, Accenture Strategy, noted, “The acquisition of IBB Consulting enhances our ability to deliver the latest thinking and strategies to our clients by leveraging emerging technologies that ultimately help them compete and win in the face of an expanding and evolving competitive landscape.”

The demand for network technology is on the rise as telecom companies have accelerated the deployment of 5G networks and cable operators, moving into the wireless space. Furthermore, media companies are making digital transformation in their internal operations, as well as bringing in technologically advanced new products. Here the buyout of IBB Consulting will help Accenture in advising its clients as the former has expertise in both these areas.

Accenture stock has gained 17% year to date, outperforming 14.9% growth recorded in the industry it belongs to.

Acquisitions – Key Growth Strategy

Accenture pursues strategic acquisitions to diversify its offerings and expand operating markets. So far in 2017, the company has either completed or signed over 15 acquisition deals across various business segments, including Altitude, Genfour, SinnerSchrader and New Energy Group. Last year, it completed or signed about 12 acquisition deals across various business segments, such as IT security, CRM capabilities and strategy consulting. In 2015, it closed 21 takeovers.

These acquisitions have enabled Accenture to set foot in newer markets, diversify and broaden its product portfolio, and maintain a leading position in the market as well. A strong cash balance of $4.13 billion as of Aug 31, 2017, and an operating cash flow of $4.97 billion generated during fiscal 2017 are anticipated to support Accenture’s inorganic growth strategy.

Bottom Line

Accenture’s long-term prospects look promising due to its sustained focus on innovative product roll outs, consistent investments in enhancing digital and marketing capabilities, and major acquisitions. Also, we believe regular acquisitions will significantly contribute to the company's revenue stream.

Additionally, the company is focusing on building partnerships which is helping it foray into newer markets, diversify and broaden the product portfolio. Most recently, Apple Inc. AAPL and Accenture joined forces to create a mixed team of designers, programmers, and other Apple experts, within Accenture Digital Studios units in select locations around the world.

Currently, Accenture carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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