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Anton

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9

Potential M&A activity in the consulting industry anytime soon because of global context?

I know this question may be odd especially given current global circumstances, but do you feel that Top Tier consulting firms could potentially grow inorganically, acquiring a top competitor or merging with another, any time soon?


I am greatly following the differents publications from MBB, and Tier 2 firms on how to navigate the crisis and get back to work smoothly with an anticipation of the "New Normal" that awaits for any business; and one key advice that is currently given is to look at inorganic options in the market to survive the storm and get back stronger, maybe by acquiring some other firms in difficulty.

We never saw it happening in this industry (Top Tier Management consulting, not talking about Booz, Monitor and Parthenom acquisitions by Big 4) and I was wondering if this crises could trigger some activity, thinking for example of Bain acquiring a Tier 2 firm to match BCG and McKinsey in numbers of employees and potentially in top line.

I know this question may be odd especially given current global circumstances, but do you feel that Top Tier consulting firms could potentially grow inorganically, acquiring a top competitor or merging with another, any time soon?


I am greatly following the differents publications from MBB, and Tier 2 firms on how to navigate the crisis and get back to work smoothly with an anticipation of the "New Normal" that awaits for any business; and one key advice that is currently given is to look at inorganic options in the market to survive the storm and get back stronger, maybe by acquiring some other firms in difficulty.

We never saw it happening in this industry (Top Tier Management consulting, not talking about Booz, Monitor and Parthenom acquisitions by Big 4) and I was wondering if this crises could trigger some activity, thinking for example of Bain acquiring a Tier 2 firm to match BCG and McKinsey in numbers of employees and potentially in top line.

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Hi,

I would say, that the next player under pressure is Roland Berger. There are a lot of rumours, that Deloitte could acquire them. There is an interesting fact, that in consulting M&A is not the best instrument due to cultural differences between firms. Basically, you don’t buy a company, you buy people, and the problem is that these people will leave after the deal.

Best,

Anton

Hi,

I would say, that the next player under pressure is Roland Berger. There are a lot of rumours, that Deloitte could acquire them. There is an interesting fact, that in consulting M&A is not the best instrument due to cultural differences between firms. Basically, you don’t buy a company, you buy people, and the problem is that these people will leave after the deal.

Best,

Anton

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Hi there,

At the moment most of the companies including MBB are preseving cash in order to tie through the COVID disruption (which is hard to tell how long the impact would last). I don't think they would be acquiring companies because of COVID, since it would cost of a lot money/cash.

There might still be some acquisition coming up, but I think those would more likely to be strategic deals, i.e. a business that the firm has been missing and had plan to aquire anyway even before COVID.

Best,

Emily

Hi there,

At the moment most of the companies including MBB are preseving cash in order to tie through the COVID disruption (which is hard to tell how long the impact would last). I don't think they would be acquiring companies because of COVID, since it would cost of a lot money/cash.

There might still be some acquisition coming up, but I think those would more likely to be strategic deals, i.e. a business that the firm has been missing and had plan to aquire anyway even before COVID.

Best,

Emily

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Hi there,

Just like the other experts are saying, top-tier consulting companies would focus their acquisition to be very specific capabilities tailored towards digital/tech.

Some interesting acquisitions that we might see in the coming years are tech companies (such as Siemens, IBM, etc.) acquiring consulting capabilities.

(for example, Siemens is heavily investing in building its consulting arm "Siemens Consulting" in order to compete with top tier consulting companies in providing turnkey digital transformations where they control in strategy and technical components of the project)

Most large consulting companies (i.e., MBBs) are still partnering with tech providers (i.e. IBM) to deliver large digital transformation projects - the race now is towards who can provide those services solo in a scalable and reliable manner (consulting companies acquiring tech capabilities VS. tech companies acquire consulting capabilities)

However, with COVID-19's impact not yet fully materialized, nothing is certain! Only time will tell :)

Best
Khaled

Hi there,

Just like the other experts are saying, top-tier consulting companies would focus their acquisition to be very specific capabilities tailored towards digital/tech.

Some interesting acquisitions that we might see in the coming years are tech companies (such as Siemens, IBM, etc.) acquiring consulting capabilities.

(for example, Siemens is heavily investing in building its consulting arm "Siemens Consulting" in order to compete with top tier consulting companies in providing turnkey digital transformations where they control in strategy and technical components of the project)

Most large consulting companies (i.e., MBBs) are still partnering with tech providers (i.e. IBM) to deliver large digital transformation projects - the race now is towards who can provide those services solo in a scalable and reliable manner (consulting companies acquiring tech capabilities VS. tech companies acquire consulting capabilities)

However, with COVID-19's impact not yet fully materialized, nothing is certain! Only time will tell :)

Best
Khaled

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If you look at the consulting industry overall there has been quite some M&A activity for a while. Big 4 making a push into the strategy consulting segment and MBB acquiring various specialist consulting firms to beef up their capabilities in data analytics and digital.

As you can see most of these acquisitions have been aimed at acquiring capabilities. However you also have the recent example of Bain Nordics acquiring Qvartz to increase market share.

https://www.bain.com/about/media-center/press-releases/2019/bain-and-company-to-acquire-qvartz/

If you look at the consulting industry overall there has been quite some M&A activity for a while. Big 4 making a push into the strategy consulting segment and MBB acquiring various specialist consulting firms to beef up their capabilities in data analytics and digital.

As you can see most of these acquisitions have been aimed at acquiring capabilities. However you also have the recent example of Bain Nordics acquiring Qvartz to increase market share.

https://www.bain.com/about/media-center/press-releases/2019/bain-and-company-to-acquire-qvartz/

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Hi there,

acquisitions in consulting usually happen to enter strategic areas quickly, not to generally push revenues or employees. The examples you provided related to big 4 are exactly related to that – they wanted to expand in a new segment (strategy consulting) where they were relatively weak.

I would imagine acquisitions could thus happen only if one company feels it is not possible for them to dominate organically one area (eg digital, as mentioned by Vlad and Ian) and they want to quickly get the capabilities to do so.

Best,

Francesco

Hi there,

acquisitions in consulting usually happen to enter strategic areas quickly, not to generally push revenues or employees. The examples you provided related to big 4 are exactly related to that – they wanted to expand in a new segment (strategy consulting) where they were relatively weak.

I would imagine acquisitions could thus happen only if one company feels it is not possible for them to dominate organically one area (eg digital, as mentioned by Vlad and Ian) and they want to quickly get the capabilities to do so.

Best,

Francesco

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Hi,

MBB companies don't have money for acquisitions. All the profits are either divided between the partners or invested in the businesses. Taking into account that this year they'll have declining revenues and partner bonuses will be decreased - I don't believe they have extra cash to do this. In addition, don't see any logical reason to grow that way.

However, they can buy some companies in digital to grow their capabilities further since it's relatively cheap.

Big 4 companies have a lot of diversified cash flows and they might be doing some acquisitions

Best

Hi,

MBB companies don't have money for acquisitions. All the profits are either divided between the partners or invested in the businesses. Taking into account that this year they'll have declining revenues and partner bonuses will be decreased - I don't believe they have extra cash to do this. In addition, don't see any logical reason to grow that way.

However, they can buy some companies in digital to grow their capabilities further since it's relatively cheap.

Big 4 companies have a lot of diversified cash flows and they might be doing some acquisitions

Best

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Hello!

There is always M&A going on, like EY recently announced for instance.

However, I see this very unlikely in MBBs, even more with the time beeing.

Hope it helps!

Cheers,

Clara

Hello!

There is always M&A going on, like EY recently announced for instance.

However, I see this very unlikely in MBBs, even more with the time beeing.

Hope it helps!

Cheers,

Clara

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There's definitely M&A activity overall.

For example, EY just announced the acquisition of boutique strategy consultancy Port Jackson Partners.

In terms of MBB, they don't generally acquire (exception being when they began building their digital/analytics services). I don't see this being their method to survive the storm (i.e. it costs a lot of $ AND they're surviving very well at the moment), but you never know!

By the way, if you're interested in trying out cases that deal with other impacts of COVID-19, check out these two cases:

https://www.preplounge.com/en/management-consulting-cases/brain-teaser/beginner/coronavirus-times-194

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-191

There's definitely M&A activity overall.

For example, EY just announced the acquisition of boutique strategy consultancy Port Jackson Partners.

In terms of MBB, they don't generally acquire (exception being when they began building their digital/analytics services). I don't see this being their method to survive the storm (i.e. it costs a lot of $ AND they're surviving very well at the moment), but you never know!

By the way, if you're interested in trying out cases that deal with other impacts of COVID-19, check out these two cases:

https://www.preplounge.com/en/management-consulting-cases/brain-teaser/beginner/coronavirus-times-194

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-191

(edited)

Dear A,

This is really very interesting question, and I would not exclude it. However, I think that some M&A activities might take place after the crisis and up. No one will free up cash during the crisis but I can imagine that after 2-3 years, when this is all over, the winners might try to grow inorganically. Who it could be and what could be the strategy, it's still hard to predict, but I really like your question.

Hope, it helps.


Good luck,

André

Dear A,

This is really very interesting question, and I would not exclude it. However, I think that some M&A activities might take place after the crisis and up. No one will free up cash during the crisis but I can imagine that after 2-3 years, when this is all over, the winners might try to grow inorganically. Who it could be and what could be the strategy, it's still hard to predict, but I really like your question.

Hope, it helps.


Good luck,

André

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