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Duff & Phelps : from valuation to restructuring, an organizational learning special case

Geert De Smet

Duff & Phelps is extending its potential within the corporate finance world. Through a number of acquisitions, Duff and Phelps is silently becoming the ‘blue-chip’ of advisory services, whether it is valuation or disputes and investigations, M&A, restructuring and legal management consulting, etc. So what’s next for Duff and Phelps? The following is a case study of how the company managed to cleverly combine organic and external growth strategies aiming at reinforcing organizational learning.

Duff & Phelps was founded in 1932 in New York to provide investment research services. Since then, the company has evolved, adding on many more diversified financial services offerings. The company slowly built its reputation through multiple client success stories, and it’s often described as a valuable advisor for successful companies, firms or wealthy individuals all throughout their growth trajectories. Now Duff & Phelps claims a large range of expertise inside of which are valuation of businesses and assets, M&A advisory, legal management consulting and compliance and regulatory consulting.  
Many of Duff & Phelps clients have been advised by the company’s specialists for decades in fact. “Doing the right thing, telling the truth and providing advice independent of our potential fee outcome is real integrity. Some of the largest clients in the firm have been our clients for 30+ years, because they know we’re a long-term partner“, says Managing Director at Duff & Phelps, Robert A. Bartell.

In 2005, Standard & Poor’s sold U.S Corporate Value Consulting business to Duff & Phelps, putting some spot light on the company that has managed to keep a family-oriented client approach along with its international evolution. Duff & Phelps progressively opened new offices around the world, including Paris in 2007, and was listed on the NYSE. By 2012, Duff & Phelps had made 14 acquisitions of complementary businesses, including Ceteris (transfer pricing business), which expanded Duff & Phelps’s service offerings.
Year 2015 also had a considerable growth turn out for Duff & Phelps, making two crucial acquisitions: Kinetic Partners and American Appraisal. Duff & Phelps expanded its practice of financial compliance and regulatory and developed its global valuation practice as well. From that time, Duff & Phelps acquired an enviable position among top C-Level advisory firms. For example, the company serves 59 of Fortune 100 companies, 5,000 mid-market companies, three-quarters of the largest private equity firms and/or hedge funds, and performed over 7,500 engagements in 2014.
Valuation Advisory Services as a cornerstone: Duff and Phelps’ signature
Valuation is one of Duff & Phelps’ specialties, having evolved the practice over time, and the company is now considered one of the top valuation services throughout the world. Today, Duff & Phelps is the largest independent valuation advisory firm, with more than 1,200 global professionals, including 125 managing directors specializing in valuation advisory.
Duff & Phelps has also made a difference in the sector, as the company is able to offer a real technical expertise, with trained specialists across many sectors, in the valuation of businesses or assets. In 2014, Duff & Phelps provided over 4,000 valuation advisories to more than 1,700 companies and these numbers are expected to continue increasing. “We want to be the elite of advisory firms, especially in corporate finance”, says Yann Magnan, Managing Director at Duff & Phelps Europe. “Our job is demanding because our clients expect us to be ‘best-in-class’ players. They expect us to bring the best expertise and the best answers to their concerns”.
Many transactions remain private to protect Duff & Phelps’ clients’ privacy. We know however that within the past six years, Duff & Phelps performed over 35 transactions with a value of over $5 billion, yet another proof point that Duff & Phelps is providing critical help to its clients when it comes to valuation.”
The valuation itself varies, whether it’s about intangible assets or intellectual property, machinery and equipment, real estate or other alternative assets (for financial reporting, tax or management planning purposes). As Magnan explains, “we have industry experts and we are organized within 5 or 6 industries. Our MDs and consultants have significant expertise in each of these industries. We also maintain strong technical expertise: our people are capable of valuing companies, real estate assets, fixed assets, intangible assets, financial instruments, CDOs, CLOs, and wathever you can think of.”
Indeed, companies or individuals who require Duff & Phelps’ assessment are looking for an advanced knowledge of the industry and specialized knowledge in their own sector. So when it comes to HR concerns, it’s no joking matter. According to Henk Oosterhout, MD at Duff & Phelps, “you need to know how to use your financial numbers in order to say something about your strategy. That’s the depth and the quality of your financial analysis”. That’s why, he explains, “We look for a special type of consultant to fit in, in our firm. Ideally we are looking for someone with a consulting profile, someone thoughtful and an excellent communicator. However, it must be someone who has the tendency to go beyond simply ‘scratching the surface’ and get to the core of an issue.”
For the company, 2015 marks a major step forward in deploying ever higher-level expertise. Duff & Phelps’ recent acquisitions have allowed to expand its competencies especially in compliance and regulatory practice, and fixed asset management advisory services.
2015 acquisitions: a milestone for Duff and Phelps’ ambitions in corporate finance
2015 has been a busy year for Duff & Phelps, but it has also been one of the most successful changing milestone of the company’s history. The two consecutive acquisitions of Kinetic Partners and American Appraisals have revealed Duff & Phelps’s goals to grow in the corporate finance world.
Kinetic Partners; a new division of Duff and Phelps
Kinetic Partners was born in 2005 in London and rapidly became a leading provider of compliance and regulatory consulting services to the financial services industry worldwide. Kinetic was solidly established globally at the time of the acquisition, which allowed Duff & Phelps to launch a division dedicated to financial regulatory and compliance consulting.
Kinetic partners is a well-respected global name within the corporate finance world, known for their unique expertise. “The acquisition of Kinetic Partners represents the ideal complement to Duff & Phelps’s valuation services, especially within the alternative asset management sector, where together we serve many of the world’s leading hedge funds and private equity firms”, said Noah Gottdiener, chief executive officer at Duff & Phelps.
Well-established among the banking and funds industry, Kinetic Partners’ clients will now have considerably more options through Duff & Phelps. Kinetic Partners and Duff & Phelps shared a same vision of a client-oriented and personal approach to service the needs better and accompany the long term clients along their growth. Kinetic Partners becoming a division of Duff & Phelps will widen the company’s field of action and place its clients in a really favorable position, being able to receive tailored-made advice in this field.
American Appraisal; incorporating a major firm
The acquisition of American Appraisal brought 900 employees operating out of cities throughout Asia-Pacific, Europe, North America and South America to Duff & Phelps. The company not only widened its geographical presence, but also acquired new talent and expanded headcount.
American Appraisal is a leading valuation and related advisory services firm that has provided expertise in all classifications of tangible and intangible assets for over a century. Through this fusion, Duff & Phelps has enriched its key offerings, especially in Real Estate advisory, which is one of the areas where American Apparaisal excelled.
Not only did Duff & Phelps broaden its field of action, but it was able to welcome more industry specialists to assist its existing clients.
Being a partner for a better Governance
Throughout 2015, Duff & Phelps drastically increased its offerings, offering new specialties and sectors to its clients. Duff & Phelps’s acquisitions have created double digit growth, not only expanding geographically in size and in resources, but also in the quality of services it offers to its new and existing clients.
“Most organizations aspire to grow and we have a broad array of services that can assist them from the front to the exit (…) The clients do like working with one firm and consolidating their partnerships”, says Bartell. “This protects confidentiality, while allowing them to deal with a core group of professionals who are invested and emotionally attached to our client’s success”, he concludes.
Geert De Smet

Pour citer cet article : De Smet, G., 2015, Duff & Phelps : from valuation to restructuring, an organizational learning special case, 22 décembre, RMS Magazine. 

Geert De Smet

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