FTI Consulting Inc. (FCN) finally completed of all the previously announced transactions with LECG Corporation for approximately $27 million in cash plus the assumption of approximately $11 million in liabilities.
In early-March, FTI Consulting announced the acquisition of International Arbitration and Airline Competition practices of LECG Corporation. Then, in mid-March, the company stated plans to acquire the majority of LECG Corporation’s European operations.
LECG is a global economics, finance and business consulting firm with approximately 1,000 professionals in 37 locations. The company has offices in London, Brussels, Paris, Madrid and Milan.
Following the completion of the acquisition, key practices that joined the FTI arm are European Competition and Economics, European Financial Advisory, European Tax Advisory, European and Latin American International Arbitration, US (San Francisco) Financial Advisory, US Airline and Aviation, US Energy and Electricity, US Environmental, US Financial Institutions Regulatory and US Insurance.
Through a combination of acquisitions and individual hiring, FTI Consulting added significant new practices and more than 200 professionals in Europe, the United States and Latin America since March 1, 2011. With the acquisition of LEGC, whish has approximately 70% of its professionals are based in Europe and Latin America, FTI further strengthened its antitrust/competition and international arbitration practices in those regions.
The professionals who served the acquired practices generated revenues of approximately $80 million in 2010. They will join Economic Consulting and Forensic and Litigation Consulting Segments and the Transaction Advisory Services of FTI Consulting.
Currently, FTI Consulting expects to garner moderate profitability in the second and third quarters of 2011 due to integration and transitional risks related to the acquisition. However, management feels productivity as well as profitability will gain momentum later in the year and into 2012.
The company expects to add a billion dollars in revenue over the next four years through growth and acquisitions, most of which will be from Europe, Asia and Latin America. In the recently concluded fourth quarter, FTI Consulting’s European practice gained momentum. The company’s European score affirms its confidence in expanding further in that market.
We view the deal as strategically positive, given LEGC Corporation’s dominant position in the European market. FTI Consulting has been active in inorganic expansion. It has made over 25 acquisitions over the past five years. FTI Consulting competes mainly with CRA International Inc. (CRAI) and Navigant Consulting Inc. (NCI).
CRA International also has a noteworthy coverage in the UK. FTI Consulting currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock.
CRA INTL INC (CRAI): Free Stock Analysis Report
FTI CONSULTING (FCN): Free Stock Analysis Report
NAVIGANT CONSLT (NCI): Free Stock Analysis Report
Zacks Investment Research
