Potential Accenture + Booz & Co. Merger?

Sounds unlikely. It would become a pretty powerful company if they actually merged.

i don't think this is "unlikely" - Booz let go of many of their employees this past winter - i believe it was around 80 consultants across the US. Booz is definitely not doing well...

If this actually happens, it would be a huge boost for Accenture. They're still not really recognized as a strategy firm (outside of IT/operational strategy), and this would lend the credibility of a long established name to their brand. I agree in saying that it would be similar to Deloitte's acquisition of Monitor, except it would have more of an impact (since, in my opinion, Deloitte's pre-merger strategy reputation is better than Accenture's pre-merger strategy reputation, however slight the difference may be).

I hope this doesn't happen..

This is clearly speculation. It's probable that Accenture demonstrated interest and the Booz partnership has to entertain all relevant offers. However, this seems rather unlikely. Contrary to the comment above, Booz has actually landed on sure footing after the split 5 years ago and is very stable financially. They did let go a bunch on underperforming consultanta last year but have subsequently been on a hiring spree this year. By all accounts, they're off to an unprecedented strong start to FY2014 with revenues and gross profit up double digits in the first quarter. While a tieup with Accenture would provide some much needed scale to the business, it would severely compromise a strategy firm's value proposition. Booz wins business by being perceived by Fortune 500 CEOs as being an objective, analytical firm. Accenture wins business based on price and scale. It would fundamentally clash with their cultures. I just don't see the Booz partnership going for it.

Everybody talks about it: http://online.wsj.com/article/SB100014241278873241700045786383228619443…

But for now it still doesn't look like a fact. Let us see. Though the idea itself definitely amuses me and to be true I do not see a big cultural difference - I can be wrong, of course

The New Yorker wrote a piece about the potential merger, titled "The Revenge of the Nerds II: Nerds in the C.E.O.'s Office" (again, can't post links yet). It has an interesting perspective on the interplay between large enterprise consulting firms and strategy firms, and puts it in historical context. Worth a read.

Hi @derkider, let me clear the air a bit.

Disclaimer: I work for Booz and have a vested interest in ensuring that comments posted in forums such as these don't dissuade potential new hires. Having said that, let me share what I can in a public forum about the firm's performance. - We are curently and have been for a while in "oversold" territory. It's been impossible to staff junior resources to newly sold engagements. - As a result, we've asked UG and MBA new hires to start earlier this summer if possible - We have raised the referral bonuses as there's a need for experienced staff as well - We're on pace to have a big uptick in 2014 in revenues and gross profits. Key drivers are improved fundamentals in distressed industries such as financial services, clear regulations with mandate in health and the ongoing boom in energry (booz's stronghold). 2014 results though are contingent on (i) continued orders momentum in the second half of 2014 and (ii) revenue realization on existing orders by being able to staff and launch sold projects

On the Accenture discussion, while the scale would be helpful, it's almost an impossible union. Here's why - (i) Booz hourly rates are ~4x Accenture's (ii) As a result, average revenue per consultant at Booz is also about 3-4x Accenture's. If you'd like to perform a back of the envelope calculation (Booz: $1.3-1.4B in revenues at 2800 consultants, Accenture: $28B with 270K consultants) (iii) Booz is extremely selective, hires only from 6-8 target schools and pays its consultant at comparable rates to MBB (iv) A merger would severely dilute the Booz brand and would lead to a mass exodus of current employees (v) The Accenture board is aware of that risk and would require retention agreements for most of the Booz partnership. The Booz partnership in return, would be unwilling to committ to such a restrictive requirement

This is why acquiring a firm from a position of strength is extremely difficult because you have a pay a huge premium to acquire it but the return is questionable when the core assets are as fleeting as their employees. This is the fundamental difference from the Deloitte/Monitor acquisition.

In short, I'm a believer in "there's no smoke without fire". I'm sure an approach was made as reported in the Journal. However, a union is highly unprobable if not imposible.

quote=skydiving83 As a result, average revenue per consultant at Booz is also about 3-4x Accenture's. If you'd like to perform a back of the envelope calculation (Booz: $1.3-1.4B in revenues at 2800 consultants, Accenture: $28B with 270K consultants)
[/quote] You can't count all the outsourcing/programming people in India/Philippines, etc. in the same bucket to get average revenue, etc. Also starting MBA hire salary for all firms are similar ($130K-$140K this year).

abacab:

skydiving83:

(ii) As a result, average revenue per consultant at Booz is also about 3-4x Accenture's. If you'd like to perform a back of the envelope calculation (Booz: $1.3-1.4B in revenues at 2800 consultants, Accenture: $28B with 270K consultants)

You can't count all the outsourcing/programming people in India/Philippines, etc. in the same bucket to get average revenue, etc. Also starting MBA hire salary for all firms are similar ($130K-$140K this year).

Came here to post this. As a former ACN guy, that's a completely unfair comparison. There are really only 13K actual people in the consulting workforce globally, and the bill rates are actually very similar for the MC projects (I've seen RFPs from both Booz and Accenture for the same project).

Pay is the same coming from MBAs, and in fact seems to be higher for ACN coming out of undergrad. ACN targets 11-12 of the top MBA programs and for the strategy practice, is actually rather selective, too.

I do agree with you about the potential for a mass exodus, mostly because of "prestige" issues stemming from the fact that Accenture is not "pure" strategy consulting.

skydiving83:

On the Accenture discussion, while the scale would be helpful, it's almost an impossible union. Here's why -
(i) Booz hourly rates are ~4x Accenture's
(ii) As a result, average revenue per consultant at Booz is also about 3-4x Accenture's. If you'd like to perform a back of the envelope calculation (Booz: $1.3-1.4B in revenues at 2800 consultants, Accenture: $28B with 270K consultants)
(iii) Booz is extremely selective, hires only from 6-8 target schools and pays its consultant at comparable rates to MBB
(iv) A merger would severely dilute the Booz brand and would lead to a mass exodus of current employees
(v) The Accenture board is aware of that risk and would require retention agreements for most of the Booz
partnership. The Booz partnership in return, would be unwilling to committ to such a restrictive requirement

This is why acquiring a firm from a position of strength is extremely difficult because you have a pay a huge premium to acquire it but the return is questionable when the core assets are as fleeting as their employees. This is the fundamental difference from the Deloitte/Monitor acquisition.

In short, I'm a believer in "there's no smoke without fire". I'm sure an approach was made as reported in the Journal. However, a union is highly unprobable if not imposible.

yadda yadda yadda that's what one would have said about monitor deloitte a year ago

Personally I think that Booz is facing the same pressures as the rest of the mid-market (Monitor, RB). If it is not in financial trouble now it will soon be. Only saving grace may be its strength in the Energy space.

@F. Ro Jo, it's hard to get into an introspective discussion with someone that relies on generalities and doesn't offer any specifics. The practices fueling most of Booz's growth in the past few years have been Health, Financial Services and C&R with Energy being a cash cow. The analogies are just off. Monitor was a distressed operation, RB is a great firm but too reliant on the German business. Booz has always been well diversified across industries and geographies. In fact, the Middle East business now accounts for over 25% of the business.

Is scale an advantage? Absolutely. But it needs to be capability-driven scale to realize sustainable synergies. The Accenture option doesn't provide that unfortunately. Add to that the cultural disparaties of both firms and you have a union that is disastrous.

ConsultingMonkey04:

@skydiving83, why don't you respond to Pissingintowind's post above instead of selectively choosing the ones that suit your bias the best? As someone at MBB with a decent number of b-school friends at Accenture strategy, I would argue that you don't actually know much about the Accenture's management consulting practice and certainly very little about Accenture's strategy practice.

Like previously mentioned, Accenture strategy only hires at top 10 MBA programs and has consistently offered one of the highest starting packages in the industry. Accenture's management consulting practice is separate from its IT practice and therefore there is very little commonality in terms of the type of people employed and work involved. As I understand it, Accenture management consulting is ~10% of the company whereas Accenture strategy is ~10% of management consulting so it is a very selective and elite group.

Having gone up against Accenture strategy and Booz in RFPs, I can confirm that charged ADRs (average daily rates) are similar for both. Of course, if this goes through, there will definitely be some integration pain points that Accenture management needs to think through carefully, but to dismiss Accenture as a volume play, one trick IT pony and comparing Accenture strategy to Booz as value vs. luxury is laughable.

Thank you. Was wondering why he was ignoring my post. Would SB if I had any. Also, yes, I did forget to mention that my 13K number (from when I was there a few years ago) was ALL of MC. Strategy is, like ConsultingMonkey04 says, a very, very small subset of that.

Pissingintowind:

ConsultingMonkey04:

@skydiving83, why don't you respond to Pissingintowind's post above instead of selectively choosing the ones that suit your bias the best? As someone at MBB with a decent number of b-school friends at Accenture strategy, I would argue that you don't actually know much about the Accenture's management consulting practice and certainly very little about Accenture's strategy practice.

Like previously mentioned, Accenture strategy only hires at top 10 MBA programs and has consistently offered one of the highest starting packages in the industry. Accenture's management consulting practice is separate from its IT practice and therefore there is very little commonality in terms of the type of people employed and work involved. As I understand it, Accenture management consulting is ~10% of the company whereas Accenture strategy is ~10% of management consulting so it is a very selective and elite group.

Having gone up against Accenture strategy and Booz in RFPs, I can confirm that charged ADRs (average daily rates) are similar for both. Of course, if this goes through, there will definitely be some integration pain points that Accenture management needs to think through carefully, but to dismiss Accenture as a volume play, one trick IT pony and comparing Accenture strategy to Booz as value vs. luxury is laughable.

Thank you. Was wondering why he was ignoring my post. Would SB if I had any. Also, yes, I did forget to mention that my 13K number (from when I was there a few years ago) was ALL of MC. Strategy is, like ConsultingMonkey04 says, a very, very small subset of that.

Based on these threads and in my opinion, Accenture MC is indeed a highly respected and selective practice. But, as Pissingintothewind pointed out, it is a very small portion (~10%?) of Accenture.

So if we want to make a more reasonable comparison of the average revenue per "strategy" consultant in this context, we should slice out only the Accenture MC practice and calculate the average revenue of that portion of Accenture and compare it to that of Booz (which seem to be at a similar level according to the thread above).

But I think using this comparison would be a bit misguided from the broader perspective, because the merger (if it happens at all anyway) is between the entire Accenture and entire Booz, not just Accenture MC and Booz.

@solution04, disagree - because if the merger does happen, the integration point between the two firms will be at Accenture's strategy and perhaps at the management consulting level. Therefore, discussing the culture, pay, work, etc of Accenture's IT and outsourcing business is irrelevant to this conversation. Accenture is too massive and specialized to be painted with one broad stroke.

Anybody knows how Booz has performed outside of the US? I heard especially their Middle East business has taken a big hit lately with losing some major clients (they are probably still the largest/second largest in that area, though). Any info on that?