18 NOVEMBER 2014 Consulting®
Each issue, Kennedy
& Advisory (KCRA)
offers a take on the
current state of the
Matthew Lyons is a
Senior Analyst, Lead
for Financial Consulting
Research for Kennedy
& Advisory. For more
information, visit www.
It’s a Floorwax... It’s a Dessert Topping...
Actually, it’s Both!
There are few sure things in the world.
One might cite death and taxes, but only
slightly down the list is the inevitable answer a Big Four consultant provides to the
question “What is your firm’s strength?”
Everything, of course.
Today that answer may be closer to the truth
than other consulting firms wish to admit,
with final pieces such as Booz & Company, Parthenon Group, and Monitor Group
snapping neatly into Big Four services
puzzles to create monolithic consulting offerings. We’ve seen movement in Big Four
services portfolios before, as firms spun off
IT consulting assets during the dot-com era,
divested controversial units in the wake of
Sarbanes-Oxley legislation, then slowly
refortified gutted consulting portfolios that
weren’t so offensive to regulators or the
business community post-SOX.
This rebuilding all started innocuously
enough; a high-end technology capability here, a restructuring practice there, all
carefully orchestrated to take advantage of
the acquirer’s scale and the target’s new
services scope. But things changed in 2010
with PwC’s acquisition of Diamond and
subsequent PRTM purchase. Deloitte’s acquisition of troubled—but capability-rich—
Monitor Group followed.
Then, PwC snapped up Booz & Company.
EY shelled out for Parthenon Group. KPMG
announced the creation of “KPMG Strategy,” an expensive internal initiative netting
900 employees into a global delivery group.
The Big Four firms can’t seem to find enough
shiny strategy baubles to burnish.
What gives? In a word… cross-selling.
Firm leaders expect strategy consultants to
help in two ways: either they generate their
own new sales with externally-facing business development, or they get pulled into
projects to augment the project capabilities
of other consulting units. Both cases will result in numerous opportunities to cross-sell
services from the extremely broad platform
each of the Big Four possesses.
Think Wal-Mart here. You’ve got five
items in the cart (project) already…what
about that sixth? It’s not a big jump, especially if you’re a Big Four client that spends
multimillions on projects every year. Even
less of a leap if the services come with a
Each firm has taken its own unique approach to building the ubiquitous consulting practice. PwC’s strategy is certainly the
most aggressive, involving big transactions
with lots of integration. Deloitte’s been in the
game on a large scale the whole time, supplemented by scale-increasing acquisitions.
EY entered the fray with a deliberate
approach—acquiring boutique Parthenon
Group which provides scale, but also complements the firm’s Transaction Advisory
Services team because Parthenon’s focus is
inorganic growth strategy. KPMG has been
more deliberate still, announcing their intention to grow its strategy practice internally.
So what’s next? Is there any dry powder
waiting to be deployed on a big strategy
firm acquisition? Yes, of course. But will
one or more pull the trigger? I think we
need to wait and see. It’s interesting times
among the Big Four. Which strategy-en-hancing strategy will prevail?
BY MATTHEW LYONS