September 8, 2015

The Global Strategy Consulting Firms Are Entering the M&A Fray, Just As Clearsight Anticipated

The large, strategy consulting firms have been showing more interest in M&A over the past 18 months and as predicted, we are now seeing deals announced.  Similar to the Big 4 Accounting Firms, these strategy consulting firms have spent years kicking tires before actually participating in M&A transactions in a meaningful way. McKinsey and BCG appear to have altered their strategy and are starting to use M&A effectively. Earlier this year BCG acquired BrightHouse, an innovation consulting firm, and just last week announced a minority investment in TSG Consulting, an advanced analytics firm.  Likewise, McKinsey acquired LUNAR Design, a creative, product design consulting firm, earlier this year.

While we don’t expect these firms to become the M&A machines of PWC, E&Y, Deloitte, and KPMG anytime soon, this is yet another group of buyers entering the increasingly crowded market for high intellect consulting firms.  Much like their accounting brethren from 7 or 8 years ago, the large strategy firms are not as competitive from a valuation or structure perspective, but they do offer cache in which some sellers see significant value.  We expect this trend to continue and for the strategy firms to be more active, and over time, to become more competitive from a deal perspective.