With Accenture Plc (ACN) known to keep details of its acquisitions close to the vest, gauging the value of its latest acquisition—Schlumberger’s (SLB) business consulting group—is tricky. Financial details of the deal for SBC were not disclosed.
In its SEC filings, Schlumberger does not break out the financial details of its Schlumberger Business Consulting (SBC). SBC, which is a consultant for upstream oil and gas companies, is managed outside of Schlumberger’s group structure.
The acquisition includes 250 SBC consultants who are expected to join Accenture after the deal is done.
Baird Energy Research said Accenture employees average about $225,000 in revenue per employee, excluding distribution workers. David J. Koning, Baird’s senior research analyst, speculated SBC consultants may generate up to $250,000 per employee, meaning the deal could add between $50 million and $65 million to Accenture’s annual revenue.
Overall, SBC would add less than a quarter of 1% of revenue to Accenture’s annual total.
In June, SBC itself said conditions for A&D “are becoming increasingly favorable.”
In a presentation, which focused on E&Ps, SBC said the “oil-price crash has left numerous firms, mostly independents, juggling high debt and diminished share prices.”
However, Schlumberger earnings beat expectations in the second quarter of 2015 on revenues of $9 billion. The company was considered a standout pick by analysts despite E&P estimated revenue declines of 36% in North America and 20% internationally, said James Crandell, managing director, Cowen and Co.
“SLB is an industry leader in technology and geographic footprint, with an outstanding balance sheet, strong cash flow and a lack of the merger-related risks and distractions being faced by its large cap peers,” Crandell said.
Schlumberger has committed to a large-scale merger. The company said in January that it would acquire a minority ownership of 46% in Russia’s Eurasia Drilling Co. Ltd. The deal could ultimately cost $1.7 billion if it elects to purchase the remainder of the company three years from closing.
As of June 30, Schlumberger had $7.3 billion of cash and short-term investments on hand.
Mark Knickrehm, group chief executive for Accenture Strategy, said the SBC transaction will give the company strategic insight into its upstream oil and gas clients.
“Our technology-driven business strategies and digital knowledge complement the core consulting strengths of the professionals who will join us through this acquisition,” he said.
Accenture incrementally adds to its company, typically by adding small revenue generators that vary widely in cost.
Koning said that the SBC deal may be Accenture’s 15th acquisition in 2015. It has made one divestiture.
“We expect the acquisitions [net of the divestiture] to contribute about 1% to fiscal 2016 year revenue growth,” Koning said.
From fiscal 2003-12, Accenture’s annual acquisitions ranged from $20 million to $300 million. In the past two years, purchasing increased from $700 million to $800 million. In 2013-14, deals grew revenue by 1-1.5%.
So far in 2015, Accenture has spent about $400 million on acquisitions—an average of about $30 million per deal.
Company revenues were about $30 billion in 2014, with its energy resources operating group generating about $1.8 billion. As of May, Accenture’s consulting revenues were about $4.1 billion in 2015. Accenture bills itself as the world’s largest independent consulting company.
Contact the author, Darren Barbee, at dbarbee@hartenergy.com.
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