Capability over Scale

One of the clearest trends we've observed across recent buy-side origination mandates is that strategic acquirers are increasingly using M&A to build new capabilities, rather than simply add scale or geographic coverage.

Rather than acquiring businesses that closely resemble their own, buyers are broadening their acquisition criteria to strengthen their technical offering and create new avenues for growth.

Examples we're seeing include:

- Engineering consultancies expanding into compliance, building safety and specialist technical advisory.

- Project and programme management firms adding environmental and sustainability capabilities.

- Testing, Inspection & Certification platforms investing in digital assurance, AI, data and cyber. Data and AI consultancies becoming increasingly attractive bolt-on acquisitions for traditional engineering and technical services businesses.

Artemis View

Capability-led acquisitions are increasingly taking priority over transactions focused solely on revenue growth or geographic expansion. While expanding into new regions remains important, it is increasingly viewed as a way to access specialist expertise, strengthen client relationships and accelerate long-termgrowth.

Many of the most acquisitive businesses appear to be asking a different question: 'What capabilities will our clients expect us to have in five years' time—and how do we build them today?'

If capability expansion is becoming a priority within your acquisition strategy, we'd be happy to share some of the themes and opportunities we're seeing through our ongoing origination work.

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