July 21, 2014

EY Announces Deal to Acquire The Parthenon Group

The monumental landscape shift in the management consulting market continues to take shape.  As we had anticipated after PwC’s acquisition of PRTM and Booz, as well as Deloitte’s acquisition of Monitor, EY has made their move acquiring the leading independent global strategy consulting boutique– The Parthenon Group.  With roots stemming from Bain & Company, The Parthenon Group has built the preeminent Strategy Consulting firm outside of the Big 3 (McKinsey, Bain, BCG).  Defined by its entrepreneurial spirit and highly talented consulting staff, The Parthenon Group is the leading strategy consulting firm to Middle Market PE Groups and the Education Vertical. 

Certainly, we suspect KPMG is thinking about its move in the strategy realm given that each of its key competitors have now made a “meaningful” acquisition.  The next question is, what will the large strategy firms (Bain, McKinsey, BCG) do as the Big 4 (Accounting Firms) are clearly encroaching on their sacred ground.  In turn, what is the future of the remaining management consulting boutique firms such as LEK, A.T. Kearney, PA Consulting and OC&C, among others?  We also are beginning to observe the IT oriented firms such as Accenture and Cognizant show interest in the strategy consulting realm to serve as their proverbial “tip of the spear”.  Interestingly enough, large diversified “product” companies such as GE are also selectively looking into management consulting firms that have deep vertical capability.

We don’t know exactly what is going to happen next (or we actually might), but we do not expect to see a slow down in the heightened level of activity as there are a number of firms, both big and small, that are feeling the pressure to take action.