Today, Accenture is a leader in using mergers and acquisitions as a mechanism to drive future organic growth through relatively small acquisitions in new and emerging strategic priorities—essentially organic growth through inorganic acquisitions each year. As part of Accenture’s capital allocation strategy, the company targets to spend 25% of free cash flow each year on acquisitions.
However, Accenture takes the view that acquisitions are not a strategy in and of themselves. Rather, our Corporate Development team works with our business teams to help realize an independently developed business strategy, one tool of which to help achieve that strategy is acquisitions.
This was the approach Accenture took with developing Accenture Song. More than a decade ago, a nascent Accenture marketing services group was trying to develop an entity to provide digital marketing services to corporations, a new way of marketing. They had an evolving strategic vision and our Corporate Development team worked with them to help to fill the gaps. We pursued a large number of marketing and advertising acquisitions over time.
This process included the acquisition of Droga5 in May 2019, one of the most innovative and influential creative agencies. The acquisition added more than 500 employees to Accenture Song boosting its capabilities as an experience agency. The succession of acquisitions coupled with organic growth and leveraging other capabilities within Accenture led to the creation of one of the largest digital agency networks in the world today.
Accenture has a world-class corporate development team that has pivoted Accenture to the realm of new technologies and driven significant growth. A demonstration of these accomplishments is an annual investment of on average, over $1 billion in acquisitions over the past eight years. Accenture’s M&A journey will not stop here. The needs of Accenture clients continue to evolve and Accenture’s acquisition priorities continue to evolve with it and at an ambitious pace.