EY OTS rebranding to EY-Parthenon M&A Strategy - Thoughts?

I'm a 2nd year MBA who has friends who were at EY OTS over the summer. They've been invited to join the "M&A Strategy" practice at Parthenon for the return offer and the practice is advertising themselves as such on campus for full-time hires. Basically, they're creating an "S&O" practice and refer to themselves as such internally (but not externally), legacy Parthenon being the S, and OTS being the O.

Apparently they're offering all hires $170k base to be in-line with Parthenon and competitive with MBB.

Here's the question: Outside of people feeling good that the name was changed, does this change matter at all in terms of resume strength or exit opps? It seems like the barrier between Strategy and Opps will still be there; rather, they're just trying to make the OTS people who are undoubtedly re-recruiting for mbb or even Tier 2 feel good by throwing them the Parthenon name bone. This isn't to knock OTS at all, it's doing incredibly well and is top-notch at what they do, even beating out MBB on engagements, but it ain't strategy work, and it seems that the word will get out pretty quickly that this name change is just cosmetic.

What does everyone think? Does this increase the prestige of the group at all or not really?

Comments (15)

Oct 1, 2019

It's kind of dumb, but at least on my campus it's already had a positive effect for them. Some friends that were there over the summer that would have re-recruited for T2s stuck to just MBB. There is a lot more interest in the group and general "buzz" from the first years compared to when it was OTS. It's hard to isolate the effect of the dramatic pay increase from the effect of the name change though. As far as exit ops, its hard to say... if you put EY-Parthenon on your resume will employers be able to tell the difference?

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Oct 1, 2019

Although not in the industry I know many who are and the reality is, big picture, there is a huge blend of S and O at many / most shops. MBB does a ton of ops work now. They didn't awhile back, but they do now as clients are looking for "end to end" engagements. Although many think of pure strat as being sexier, the reality is getting great ops experience is critically important if you plan on exiting to industry and want to run a company.

In fact, when my older brother was at MBB (post MBA - actually when they only hired post MBA from about 5 schools), he left after his role of EM because he was getting tired of making all the recommendations and never being afforded the opportunity to stick around to see the result. He found a happy blend of S and O (called running a company) in industry.

From what I read and in speaking to those in the game, tons of projects at major firms involve a blended team and in early yrs you would likely be staffed in both capacities no matter what the business card or brand name says.

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Oct 1, 2019

While I agree that MBB does a lot of implementation, I think what gives some people (including myself) pause about OTS is that it's strictly pre/post integration/divestitures along with some Working Capital projects... it just doesn't seem to leave a lot of room for strategy at all and seems rather intellectually unstimulating, more just project management and herding people.

This could just be my impression, though.

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Oct 1, 2019

Honestly don't know too much about OTS specifically. I would seek out live bodies and ask some pointed questions. EY-P was / is very much involved in Strat so maybe they're blending the two to give that end to end experience I mentioned.

Oct 1, 2019

I believe that EY's equivalent to Strategy&'s Private Equity Value Creation group (due diligence, operational transformation, some strategy) also fell under OTS. According to the Parthenon US recruitment page, it's moving with the name change.

That being said anyone recruiting into this looking for McKinsey-lite will probably be disappointed. It's a solid choice for someone who wants to work in M&A, but doesn't want to do banking.

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Most Helpful
Oct 2, 2019

I have been in OTS for 2+ years and have done work with Parthenon. I'll try to provide some color on the group, the recent changes, and to also address a few of OP's comments.

Legacy OTS, now the 'O' in 'S&O' as well as the 'M&A Strategy Group' in EY-Parthenon, falls under the Transaction Advisory Services branch at EY. This is distinct from the Advisory branch that offers the BAP and TAP programs, which is a question I frequently get. One way to think about how TAS is constructed is as follows:

  • Segment 1 - Transaction Diligence: the foundation of EY TAS and any of the Big 4's TAS divisions. This is the service offering that enabled the creation of OTS, PwC DDV, Deloitte M&A, and KPMG's deal team. This team does accounting due diligence (think QofEs), and is a big reason why using a Big 4 for Deal + Strategy related work is attractive.
  • Segment 2 - S&O: this is OTS and Parthenon.
  • Segment 3 - Corporate Finance: this houses the middle market investment bank called EYCA, EY's Restructuring and Turnaround advisory group, the EY Infrastructure advisory group, and the Valuation, Modeling and Economics group.

As the name Operational Transaction Services would imply, legacy OTS (will just call it OTS from here) works across pretty much the entire M&A lifecycle, but all from an operational lens. In my opinion OTS has historically been 40% post-close merger integration work, 40% post-close divestiture (carve out) management, 10% working capital advisory work, and 10% pre-deal operational due diligence/value creation work. Like most advisory shops, within OTS there is an array of 'horizontals' and 'verticals' which attempt to segment the group into industries and functional areas, but the above breakdown is effectively how it works. The 80% of OTS that does post-close work assists primarily with large transactions, while the 20% that does working capital, ODDs, and an assortment of other 'Value Creation' oriented services (think Strategy&'s Private Equity Value Creation team) works primarily with Private Equity portcos.

A few months back, it was announced that we would officially be merging with EY-Parthenon to create S&O. There are still outstanding questions as to what this means for legacy OTS and for legacy Parthenon, but I'm relatively confident in the following:

  • From a recruiting perspective, OTS is now called EY-Parthenon M&A Strategy, and legacy Parthenon is now called EY-Parthenon Growth Strategy; internally, it is S&O (this is WIP)
  • OTS salaries have been/are being adjusted to be on par with the Parthenon group
  • The plan is to have the staffing pool gradually intermingled, giving junior resources the opportunity to more easily access both M&A-targeted and Strategy-targeted experience

Now, to address some of OP's comments.

Outside of people feeling good that the name was changed, does this change matter at all in terms of resume strength or exit opps?; Depends on your perspective. If resume strength and access to opportunities down the line is defined by a brand on your resume, then I would argue that even with the EY-Parthenon brand, the group's identity in the market is going through a notable change and will not ring the same bells as MBB (you could argue that the standalone Parthenon brand did/didn't before being acquired by EY). If resume strength and exit opportunities are defined by the portfolio of experiences you amass in your time working at a firm, then I would argue that the merger is a significant good guy. If I were a CEO looking to hire a VP of Corporate Development at a company (assuming this is what some strategy/M&A consultants might be interested in), I'm more likely to hire the guy/girl who has done 4 commercial due diligences, 3 operational due diligences, has been on 2 long-term post-merger integration cases and has helped carve out a BU over a guy/girl who has done 22 commercial DDs and nothing else (might be a different story if hiring for a VP of Strategic Growth, obviously).

It seems like the barrier between Strategy and Opps will still be there; rather, they're just trying to make the OTS people who are undoubtedly re-recruiting for mbb or even Tier 2 feel good by throwing them the Parthenon name bone; As I mentioned above, the plan is to slowly create a model where the staffing pool is shared which will provide a more well-rounded experience for junior individuals who will have access to pre- and post-deal M&A and Strategic work.

This isn't to knock OTS at all, it's doing incredibly well and is top-notch at what they do, even beating out MBB on engagements, but it ain't strategy work; Depends on how you define strategy. Is OTS your conventional growth strategy shop? No. Is having 6 weeks to come up with a plan around how you're going to merge the culture, operations, go-to-market strategy, brand, and every other facet of two $30b pharma companies over 24 months strategy? Is creating a plan (pre-close) for how a PE buyer is tactically going to close on a pending acquisition, improve EBITDA by 30% based on operational value creation levers you identify, and use that acquisition as a platform to bolt on 6 other acquisitions over 16 months strategy? Is working directly with the head of Inventory at a multi-billion dollar retailer to outline a plan by which the firm is going to renegotiate terms with all of its vendors and customers to free up $100m of working capital over 12 months strategy? Not sure - sounds strategic to me, but again, it's how you define it (note: these are examples of the types of projects commonly worked on by OTS).

Happy to address follow-up questions.

Oct 2, 2019

Just as a follow up from a fellow OTS'er who's had 2+ years in the team giving a UK perspective:

Our breakdown is a little different than above, I would say C.40% of our work is divestment assistance in some form or another, 30% ODD / IT DD (both buy and sell side), 15% PMI and 15% miscellaneous.

As far as our merger has gone - not much has changed, internally we're called S&O however our salaries have not been aligned neither have our working practices. I have noticed a lot more of the senior people moving between the teams and many of the analysts have done a stint at Parthenon already and vice versa

Many differences from a UK perspective may come from Parthenons brand being largely US centric, the name isn't as impressive in the UK and as such we're not being absorbed in the same way other countries have been (case in point - our average salary across th team is higher than theirs, believe this is heavily skewed by our directors / partners given i've heard their graduate salary is much higher than ours).

Looking forward to how this is going to play out but there was a bit of worry when it was first annouced that we would be adopting their working habits without adopting their pay scale (at the junior level), glad to see so far that hasn't happened

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Oct 2, 2019

None of the examples you mentioned would be classified as the strategy capability at MBB. When people say your Deloittes and PwCs start beating MBB on xyz strategy capability, it's often not considered a core strategy capability by MBB.

As an example,
"Is working directly with the head of Inventory at a multi-billion dollar retailer to outline a plan by which the firm is going to renegotiate terms with all of its vendors and customers to free up $100m of working capital over 12 months strategy?"

This would fall under the procurement capability of MBBs Ops teams and which are considered implementation skills. The question whether freeing up $100m of working capital is the most critical path to take for that same retailer - or what else is higher value - is the strategic question.

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Controversial
Oct 2, 2019

I'm not trying to turn this into a comparison of EY and PwC. But our Deals Strategy team focuses on two core types of engagements:

Questions around markets, customers, channels, and competitors in an acquisition. This work is concentrated at the top 25 private equity funds, in addition to large middle market (a few billion or more in EV) corporate acquirers. Often under the label of a commercial diligence but usually with specific, material questions and concerns around an acquisition that we are hired to investigate. Such as whether an acquisitions product portfolio is a fit for the acquirer's current channels to market. The work tends to result in a direct go or no go decision. I've worked on projects that have greenlit or killed Deals for top 5 private equity funds and $10B corporates. I have also worked in nascent market areas where a potential investor is evaluating opportunities in relatively untested environments.

The second large bucket of questions is around growth of a business and/or improvement of the commercial portion of an enterprise. Our sponsor on these projects is typically the CE. Results typically lead to a redefinition of a business' core, material divestitures/acquisitions, and a full transformation of a businesses commercial structure. Businesses tend to have at least a few billion in revenue.

I've spoken at length with friends at MBB and the work we do parallels many projects they have worked on. Don't get me wrong - we don't get the biggest or sexiest growth strategy projects on the markets, MBB is light years ahead there. But it is definitely strategy work.

Our group was founded by recruiting external partner/director talent whose experience ranges across BCG, Bain, McKinsey, LEK, Marakon, Altman, Roland Berger, and specialized boutiques. They are oftentimes leveraging their prior relationships in order to sell work. PwC's strong PE relationships and other Deals capabilities (financial diligence, ops, tech, implementation, etc) provide them with significant networking opportunities and are a resource in sourcing work, which has been a large driver for our partners to join our practice

Agree on all your points around the referenced projects sitting in implementation/operations/procurement teams. It is similar here.

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Oct 2, 2019

I don't think anyone would suggest that this practice is going to compete with MBB for core strategy projects or talent. If OTS and Parthenon are moving towards a common staffing pool (as some have suggested here), this becomes a lot more attractive as a fourth or fifth choice for those recruiting on campus.

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Oct 12, 2019

Exits to IB?

Oct 17, 2019

If you compare the LinkedIn profiles of the interns 3 months ago to today, you'll see that more than half already changed the title of their internship to reflect the Parthenon name.

Parthenon is keeping their target schools for Growth and for M&A separate, but most of these schools are top tier. I wouldn't be surprised if 4 years from now both arms recruit from the same schools.

The name change definitely increases the brand value, and as others have suggested, the staffing pool might merge at some point in the future. M&A brings a huge growth potential to Parthenon, and according to their website, it represents 70% of the work they do. I think it's here to stay.

Oct 17, 2019
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