The strategy consulting market is shaking on its feet following the news that accountants- and advisory firm PwC has acquired global strategy consultancy Booz & Company. The deal still nees to be approved by the partners of Booz & Company, who will come together in December to vote.
With the takeover of Booz & Company, PwC instantly buys itself into a leading player in the strategy & operations consulting marketplace, jumping past BCG, Accenture and Bain in terms of global revenue.
Booz & Company was founded in 1914 by the American Edwin Booz. Following the addition of two new partners its name evolved in the 1940’s to Booz Allen Hamilton. Over the past 100 years, Booz grew into one of the top 5 global strategy consulting firms, competing with larger players as McKinsey, BCG and Bain, smaller players as Roland Berger, Monitor and OC&C Strategy Consultants and the strategy practices of large professional services firms (eg. Deloitte, Accenture). In 2008, the firm employed more than 21.000 consultants.
Following a strategic reorientation and the involvement of private equitybedrijf The Carlyle Group, in May 2008 Booz decided to split into two firms. Booz Allen Hamilton (18.000 consultants) was founded to serve the American public sector and the international operations aimed at the private sector was bundled into Booz & Company (3.300 consultants).
Over the past five ‘crisis’ years Booz reconfirmed its position as a top-5 player in the marketplace, partly also as a result of the acquisition of three renown competitors: in 2009 it bought strategic advisory firm Katzenbach Partners, last year it bought Axon Advisory Partners and early this year it acquired the German-based Management Engineers.
Despite the acquisitions, and mainly due to the changing pressures and dyamics within the strategy consulting market, Booz & Company was during its 5-year independence not able to close the gap with its competitors. The firm currently has circa 3,000 employees in 57 offices across the globe, far less than the three marketleaders. The firm found itself in the so-called ‘stuck in the middle’ space – too small for market leadership yet too large to be picked up by a small competitor.
As a result, there has been continued speculation on its future. In 2010 it announced it had opened negotiations to merge with rival A.T. Kearney, yet following a detailed due diligence the merger was for ‘cultural reasons’ blown off one month later. Early this year, rumours surfaced in German and American media that Accenture was close to a deal with Booz & Company, although the reports were regarded as ‘nonsense’ by Booz. Now, two months later comes an end to speculation: Booz & Company has been bought by Big 4 firm PwC.
For PwC, the acquisition means a large boost to its strategy & operations consulting practice, both in terms of volume and prestige. Currently, in terms of revenue from Strategy & Operations, PwC was trailing marketleader Deloitte by a large distance. The addition of Booz & Company makes it in terms of revenue the third largest player in the field, passing Boston Consulting Group, Accenture and Bain. Booz consultants will be integrated into the consulting practice van of the professional services firm – PwC Advisory – and will reportedly lead the strategy & operations portfolio.
PwC’s acquisition was a relatively well kept secret. Over the past months it has continuously been linked with interest in Roland Berger, some sources such as the Financial Times stating that it even was close to a deal. With hindsight it can be concluded that Booz held negotiations with both firms simultaneously, and while it walked away from discussions with the Germans it managed to strike a deal with the Americans.