TBR Special Report - PWC & Booz Merger


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PwC and Booz form consulting behemoth, disrupting the
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TBR Special Report - PWC & Booz Merger

  1. 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. TBR SPECIAL REPORT PwC and Booz form consulting behemoth, disrupting the current consulting landscape Patrick M. Heffernan, Principal Analyst (Patrick.heffernan@tbri.com) Stephanie Artigliere, Analyst (Stephanie.artigliere@tbri.com) April 4, 2014 “Strategy&” propels PwC into the strategy stratosphere Announced in October 2013 and finalized Thursday, April 3, PwC’s acquisition of Booz & Company substantially disrupts the management consulting landscape and sets the firm up to become a behemoth, stretching from strategy through execution like few other management consulting vendors. Now PwC must absorb, embed and roll out its new strategy consulting capabilities seamlessly — and early indications point to a firm well-positioned to execute. Global strategy consultancy is formed After a five-month acquisition process, PwC and the strategy house formerly known as Booz & Company announced on April 3 the full roll out of “Strategy&,” a global strategy consultancy embedded within PwC’s global network. According to PwC, the firm gained 300 new partners and 3,000 staff, spread across 50 international locations, earning more than $1 billion in revenue (see below for TBR revenue estimates). The firms plan a marketing campaign around the new “Strategy&” brand as well as a sustained push to ensure the new Booz professionals mesh with their new PwC colleagues. What PwC was, what PwC has become: Booz strategy plus PwC functional Prior to the acquisition, PwC’s strategy consulting practice ranked sixth in global revenue (in TBR’s 3Q13 Management Consulting Benchmark) and the firm’s key competitors across consulting were the other Big Four firms and global IT services players such as Accenture and IBM. With the addition of Booz & Company, PwC substantially shifts its offerings mix and can better respond to clients’ demands for transformational strategy, what Booz has traditionally called “capabilities-driven strategy.” PwC has essentially leap-frogged over its standard competitors, placing it at the boardroom table with McKinsey, Bain and BCG, the strategy consulting heavyweights.
  2. 2. www.tbri.com TBR At the same time, the former Booz consultants can tap into PwC’s functional expertise, expanding their range of consulting services. For example, Booz’s “Fit for Growth” platform advised clients on reducing costs and reinvesting resources. Married to PwC’s audit and tax expertise, clients will now be offered a complete strategy- through-execution package. High expectations and aggressive hiring plans make competitors feel threatened With a global rollout and new brand, PwC and Strategy& have set high goals: Bring end-to-end consulting capabilities to clients looking for transformation in a business environment permeated by emerging technologies; meet global clients’ demands for the best people, on location, delivering global best-practices; and seamlessly (for clients) absorb a billion-dollar global partnership into its existing a global member firms arrangement. According to PwC, the regulatory hurdles including Sarbanes-Oxley conflicts have been fully resolved, and the firm is aggressively hiring to meet growing demand — demand fueled at least in part by client excitement over PwC’s invigorated vision. Competitors have also expressed strong feelings about the acquisition, telling TBR PwC is now “a more substantial threat” that will “attract more clients” with “much better solutions and support services.” Nearly every consulting vendor TBR spoke with said the same thing: In light of the acquisition, competitors will have to work harder now to retain clients. In addition, competitors will be pressed to retain their best people. Absent physical products, consulting relies on talented people to deliver value to clients. And the most innovative and successful firms draw the most talented people. With the addition of “Strategy&” and an aggressive hiring strategy, PwC threatens to pull talented consultants away from its competitors. Journey to change operating model Looking beyond the next 18 months, as PwC fully absorbs Booz & Company and competitors adjust, the more substantial change will come within PwC as its consulting practice continues to evolve into a more integrated, global operation, becoming more like Booz was (and Accenture and IBM are) and less like the collection of member firms tied through tax and audit practices. TBR expects disruptive technologies, such as digital, cloud and analytics, to pressure PwC and its competitors to adjust what they bring to the market and how they’re structured to meet new client demands. As TBR has previously noted, PwC picked up a top-tier strategy firm with Booz; but the firm also picked up a growing digital consulting practice in Booz Digital to complement PwC’s other emerging technology acquisitions. With new hires across the globe, acquisitions bringing fresh talent and seasoned partners, and clients demanding an ever-widening reach of consulting services, PwC will be stretched to evolve its business model rapidly enough into the consulting firm the market will demand. Management Consulting Vendor 2012 Global Management Consulting Revenue (USD millions) 2013 Global Management Consulting Revenue, Est. (USD millions) PwC $6,986 $7,174 Booz & Company $1,390 $1,530 Source: TBR 3Q13 Management Consulting Benchmark, published December 2013
  3. 3. www.tbri.com TBR Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com. ©2014 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.