Consultancy mergers are fraught with risk. Too often the culture clash overcomes the strategic logic. Partners find swimming in a larger pool not wholly of their own making not to their liking. That will likely be the biggest challenge to the proposed combination of PricewaterhouseCoopers and Booz & Company, especially as PwC will be acquiring Booz, whose name will no longer be over the door. There is anyway probably not a door wide enough to accommodate the addition of even four more letters to the 22 PwC has already run together.
The logic for the merger is impeccable, however. PwC will get to expand its advisory and tax practice with the addition of Booz’s 300 partners (more than twice as many as in PwC’s strategy practice), while Booz, though well-regarded as a strategy shop, gets itself out of the middle-sized consultancy firm’s trap of being neither sufficiently global or niche to meet the project needs of clients that are themselves getting larger. Dennis McNally, chairman of PwC International, rehearsing a future sales pitch, says the combination would “give CEOs the opportunity to work with a global consulting team that could provide services from strategy development right through to execution.” The desire, and in some cases regulatory requirement, to separate consulting and auditing businesses that occurred after the collapse of Enron in 2001 is becoming a distant memory in corporate boardrooms.
Booz & Co. separated from Booz Allen Hamilton, in 2008, peeling off the corporate consulting practice from the much larger government consulting business which retains the original name. PwC is one of the “Big Four” global accountants along with KPMG, Deloitte and Ernst & Young. It has stolen a march on the other three by picking off what looks to be best available plum. McKinsey and Boston Consulting are big enough to be acquirers rather than acquired, Bain is too specialized as a private-equity powerhouse and Germany’s Roland Berger has shown a strong desire to remain independent after flirting with Deloitte in 2010, the same year a putative marriage of Booz and AT Kearney collapsed.
There is rarely a merger of equals when it comes to corporate cultures. One invariably turns out to be dominant. Yet successful mergers find a way for the two sides to come together around some shared values, and common operating processes, without necessarily trying to change everything else. The trick lies in the acquirer not destroying what it was that made the acquisition valuable in the first place.
Booz’s partners are set to vote on the proposed acquisition with PwC in December. Cesare R. Mainardi, Booz’s chief executive, echoing McNally’s words, says the combination would “help reinvent management consulting for the next century.” Well, perhaps — if the two sets of partners can get along.