KPMG Acquires Turnaround Consulting Firm BBK

KPMG announced last week that they are acquiring automotive-focused turnaround and restructuring firm BBK, headquartered in Detroit. While otherwise relatively unremarkable amidst the most active consolidation market for management consulting firms, it reinforces a couple of key tenets we have been discussing with our Consulting clients:

• The Big Four accounting firms continue to lead the way in this consolidation wave. While KPMG has been the least active of the four major accounting firms, clearly they too are picking up the pace.
• Niche focused consulting firms are garnering the most attention, and consequently the best values. BBK is very focused both from an industry and functional perspective. We have seen high levels of interest from firms focused on verticals including healthcare, telecom, insurance, manufacturing, energy and horizontal firms focused in areas such as strategy, HR, and operational improvement.

While the consolidation activity gets the headlines, we continue to see strong interest from private equity firms in the consulting sector.  However, PE groups often find themselves at a disadvantage from a pricing perspective given the heightened level of valuations in the market.