PwC acquires global strategy consuting firm Booz & Company

30 October 2013

The strategy consulting market has been rocked by the news that accounting and consulting firm PwC has closed a deal to acquire Booz & Company, one of the globe’s leading strategic consulting firms. The deal still needs to be approved by the partners of Booz & Company, who will come together in December to vote. 

With the acquisition of Booz & Company, which would be PwC’s largest consulting acquisition in its history, the Big Four firm elevates itself into the world’s third largest strategy & operations consulting firm, jumping ahead of The Boston Consulting Group (BCG), Accenture and Bain & Company 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 globe’s top 5 global strategy consulting firms, competing with larger players such as McKinsey, BCG and Bain, smaller players such as Roland Berger, Monitor and OC&C Strategy Consultants and the strategy practices of large professional services firms (eg. Deloitte, Accenture). At its peak in 2008, Booz Allen Hamilton employed more than 21.000 consultants and staff. 

Number of consultants per strategy consulting Firm

Following a strategic reorientation and the backing of private equity firm The Carlyle Group, in May 2008 Booz Allen Hamilton decided to split into two firms. Booz Allen Hamilton (18.000 consultants) was established to serve the American public sector, while the international operations focused on the private sector was bundled into Booz & Company (3.300 consultants).

In the intervening five years, which saw the consulting industry grapple with the effects of the financial crisis and its aftermath, Booz managed to maintain its top 5 position in the marketplace, partly on the back of three acquisitions of reputed competitors which added new expertise and capabilities to its footprint. In 2009 the consultancy purchased strategic advisory firm Katzenbach Partners, last year it bought Axon Advisory Partners and early this year Germany-based Management Engineers was integrated into its European ranks. 

A mix of factors– including changing pressures and dynamics within the strategy consulting market – meant that Booz & Company however did not manage to close the gap with its competitors. The consulting firm currently has circa 3,000 employees in 50+ offices across the globe, far less than the three market leaders, collectively known as the ‘MBB’. According to analysts, Booz & Company finds 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, speculation on the firm’s future has dominating consulting headlines for a while, also fuelled by a previous adventure which broke down three years ago. In 2010, Booz announced that it had opened negotiations to merge with rival A.T. Kearney, yet following a detailed due diligence the merger was blown off one month later, with ‘cultural reasons’ cited as the deal breaker. And early this year, rumours surfaced in German and American media that Accenture was close to a deal with Booz & Company, although the reports were rebuffed as ‘nonsense’ by Booz. Now, the partners of Booz & Company have dropped their desire to operate independently, in favour of joining Big 4 firm PwC. 

Number of consultants per strategy consulting Firm

For PwC, the acquisition represents a tidal boost to its strategy & operations consulting practice, in terms of volume, prestige and access to a CxO client network. Currently, in terms of revenue from strategy & operations services, PwC trails market leader Deloitte by a distance. The addition of Booz & Company will enable the firm to overtake The Boston Consulting Group, Accenture and Bain, handing the professional services giant a third spot globally.

After integration, Booz & Company will operate as PwC’s strategy consulting business, and operate standalone alongside PwC Advisory – the consulting practice van of the professional services firm. Due to contractual agreements made with Booz Allen Hamilton, PwC will have to drop the ‘Booz’ name from its brand, and in the coming months will be on the lookout for a new brand for its new arm.

Roland Berger?

With the bolt-on of Booz & Company, PwC is likely to drop its interest in Roland Berger, another strategic consultancy with which it has continuously been linked in the past years. According to the Financial Times, PwC and Deloitte came very close to signing the German-origin strategy consultancy, however, too many partners of the German consultancy, including founder and namesake Roland Berger, proving resilient in their effort to keep Roland Berger adrift as an independent player. 

Update on April 2014: PwC has rebranded Booz & Company as Strategy&, a brand which according to both firms reflects the firm’s strategic focus.

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