In order to provide impetus to its corporate finance advisory and restructuring activities, FTI Consulting Inc. (FCN) recently inked an acquisition agreement to acquire Brisbane, Australia-based KordaMentha (Qld) (KMQ). The purchase consideration of the deal was not disclosed.
Founded in 1992, this Brisbane-based firm has been operating under a licence agreement with the KordaMentha brand since 2003. Its activities sprawl over various growth industries, including construction, mining, healthcare and real estate. We view the recent deal as strategically beneficial for both parties.
So far, the firm’s performance has been worth-mentioning in the turnaround and restructuring as well as, corporate advisory and corporate recovery practices. It has contributed immensely to several high-level Australian corporate recovery projects as well as complex insolvency engagements in Australia.
Years-old association with blue chip clients also speaks of its ability in the concerned areas of action. Given KMQ’s dominant position in the Australian market, the acquisition will provide FTI Consulting a strong foothold in Australia, which is a key market for the company’s Asia-Pacific expansion.
This acquisition will considerably enhance FTI Consulting’s reach in Australia with additional 70 or so professionals in Brisbane and the Gold Coast.
On the other hand, KMQ will be able to operate at a greater scale after joining FTI Consulting. FTI Consulting provides advisory services to primary business centers around the globe. Thus, KMQ can now seize the opportunity to capitalize on FTI’s geographic diversity and better serve its clients.
The deal awaits completion of definitive documentation as well as customary closing conditions and is expected to be sealed on 2nd October, 2012. Following the completion, the two business units of KMQ, KMQ Insolvency and 22 Capital, will be under the roof of FTI Consulting’s Corporate Finance/Restructuring practice.
Corporate Finance Restructuring (accounted for approximately 27% of the total 2011 revenue) business of FTI Consulting ended the second quarter on a strong note aided by more bankruptcies in North America leading to increased demands for restructuring services as well as higher demand across the Asia-Pacific region. We believe such strategic acquisitions will augur well for FTI Consulting and help it cater to the greater demand in Asia-Pacific.
The company has recently shifted its focus on Asia-Pacific region. During the past two years, FTI Consulting has expanded its footprints in Asia-Pacific region through all five of its core business practices: Corporate Finance/Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications. In Asia-Pacific, FTI consulting is located in Australia, China, Hong Kong, India, Indonesia, Japan, the Philippines and Singapore.
FTI Consulting has been active in inorganic expansion. It has made over 25 acquisitions over the past six years. It competes mainly with CRA International Inc. (CRAI) and Navigant Consulting Inc. (NCI). FTI Consulting currently carries a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
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