I only wish I was accurate with my investments as with the timing of material in my blog! Below is a link to an article in the FT regarding the potential sale of Roland Berger, a mid sized strategy consultancy to PwC…it raises a bunch of very interesting integration issues…to do with the sale of a business whose only value is in its human capital. Potential value destruction disaster!!
Categories: Consulting, Mergers & acquisitions
Tags: consulting, culture, http://on.ft.com/18vWDlQ, human capital, intellectual property, Merger integration
As I have witnessed many due diligence blunders I wonder whether PWC went to the effort to understand what made the consultants working in Roland Berger work for that type of consultancy rather than follow the more “obvious route” of joining one of the big four (or five, depending on your own definition of “big”). These are two very different worlds, and until proof is given of the contrary, individuals who enjoy one of those worlds are unlikely to feel comfortable in the other.
This all feels like the acquisition of caged precious animals, where the door of the cage is left wide open … So yes indeed, potential value destruction if the expensive cage turns out to be an empty box.
Beautifully put, Paul…I couldn’t agree more. In these types of transactions, the biggest mistake that the buyer is likely to make is to think that they are engaging in some kind of asset/share acquisition. In fact, what they’re doing is a rather large, expensive and unfocused executive search exercise! The whole approach to retention has got to be based on the latter rather than the former….locking people in without clarity of role, reporting lines, and integration plan / strategy is throwing good money after bad.
The other thing I would really worry about is that the deal has no doubt been sold on some kind of access to clients, cross selling strategy. This depends in turn on a quality of relationships (highly protected and often not as good as expected), some kind of sales ability (not a natural for the vast majority of global relationship partners…who are often resprayed auditors….not a bad thing, just not ideal for selling consulting services), and finally a book of C2 clients that are attractive (non-audit clients….a big challenge for any consultant coming in will be the realisation that inevitably for some of their biggest relationships, the nature of audit restrictions will not allow them to continue providing a service to these clients).