Acquisitions of big four accounting firms are shaking up the global consulting market. But they are not the only services providers aiming to become a “one stop shop” for business services.
Before PwC recently acquired Booz & Co., technology giant Accenture was reported to be involved in negotiations with Booz, too. This was not the first acquisition from one of the big four, with PwC having bought operations expert PRTM in 2011, Ernst & Young (E&Y) taking over J&M Management Consulting, KPMG buying Brainnet, and Deloitte acquiring Monitor in early 2013. Booz itself was a nice purchase, since its balance sheet was free of debt after selling Booz Allen Hamilton to private equity investor Carlyle Group. (FT, Gapper)
Big players buying consulting companies are not something entirely new, though. After Arthur D. Little (ADL) filed bankruptcy, French Altran Technologies acquired the brand name and financed the buyout of non-US offices in 2002. This move did not pan out as planned and resulted in a management buyout of ADL managers in December 2012, thus reestablishing ADL as an independent consultancy. Another failed merger is the case of A.T. Kearney (ATK) and Electronic Data Systems (EDS, which can be compared to IT and outsourcing specialist Accenture). After merging in 1995 the parties split again in 2005. (FT, Velamuri) ATK was later reported to be in negotiations with Booz & Co. (FT, Gapper)
German Roland Berger has been involved in various merger rumors. The Financial Times reports that Berger partners had to give up their bonuses in order to deal with their debt situations. After negotiations with Deloitte failed to create the second largest consulting company after McKinsey, now the speculations are back on: Not only is Deloitte still interested, but also PwC and E&Y. (Reuters)
In a personal conversation a German partner of a mid-sized consulting company told me how this has been going on for years, and is seen as a natural trend in all industries. According to him the golden years of the 90’s are over.
So what is influencing these developments and driving change? More on this in my next blog.
RichStrategy 