On November 7, 2012, Monitor Group's US subsidiary filed for bankruptcy and announced that Deloitte would acquire their global strategy practice. Monitor had between $100M and $500M of each assets and liabilities. On January 11, 2013, the deal went through for about $116M (according to The Economist).
Monitor had a prestigious reputation as a boutique consulting firm with a tight-knit community and a strong collegial vibe. At Queen's University especially, it was not uncommon for candidates to turn down McKinsey, BCG, Bain and other firms to work at Monitor.
Now let's talk numbers for a moment. How big was Monitor before the acquisition? Around $150M-$200M (my estimates could be a little off - please correct me if you have more accurate estimates).
How big is Deloitte? Deloitte had revenues of about $32B in FY2012. Statista pegs their revenues from consulting as about $10B in 2012. That puts Monitor at about 1.5-2% of Deloitte Consulting's size. Why is this interesting? Because the acquisition was not a play for growth; rather, it provides Deloitte with (in my opinion) access to a strong client base, top consulting talent, and an opportunity to cross-sell tax, advisory, etc. services. So the next question is:
Have any other consulting firms considered mergers or acquisitions recently?
The answer to that is an unequivocal yes.
In 2010, A.T. Kearney and Booz were in talks to merge.
In Nov 2010, Roland Berger rejected a merger deal with Deloitte
In early 2013, Deloitte was in talks to purchase Booz, and were in 'advanced talks' to purchase Roland Berger.
As of April 2013, rumors have been abound about a PwC (Advisory Rev: $9B) acquisition of Roland Berger ($850M).
As of July 2013, Accenture (Rev: $28B) is in talks to buy Booz ($1.4B)
Almost every major consulting firm outside of the Big 3 and Oliver Wyman (which is owned by MMC) has been bought, sold, or considered for an acquisition.
With Deloitte's acquisition of Monitor, the floodgates have opened.
Firms that are not known primarily for their strategy consulting - this largely means Accenture, IBM, HP, and the Big 4 - are considering how they can strengthen their brand as strategy consultants. It's likely that they'll be looking into their own acquisitions.
And while an acquisition will not drastically boost revenues in the short terms (Even Booz's $1.4B is just 5% of Accenture's yearly revenues), it will give the acquirer a seat at the table of top management consulting firms and the opportunity to offer a true 'full-service' consulting proposition. Accenture is already a powerhouse in IT consulting - now imagine they could also offer the services of a major strategy consulting firm like Booz & Co.
Will there be any independent mid-tier firms by this point in 2015? Roland Berger, ATK, Booz, with LEK and ZS The list of major strategy consulting firms is small - and likely to get smaller.
So what does this mean for you?
If you're considering an offer from any of these firms, make sure you consider that a merger or acquisition - either by your company or of your company - will dramatically impact the firm's culture, it's reputation, it's internal politics, and it's promotion policies.
I wouldn't want to be a Deloitte Consultant after a Roland Berger acquisition (those RB guys have to go somewhere), nor would I want to be an Accenture consultant after a Booz acquisition. At the same time - if I were considering joining Roland Berger or Booz, I'd have to keep in mind that I might be working for another company in a year or two. Students who turned down MBB offers to join Monitor now work for Deloitte (Monitor-Deloitte, to be precise).
It'll be interesting to see what develops over the next year or two. Stay tuned.