PricewaterhouseCoopers Buys Out Booz & Company
One of the “Big 4” consulting companies has confirmed that a merger will take place. PricewaterhouseCoopers (PWC) is set to purchase Booz & Company. Sources say that the buy is one of the more notable moves by PWC due to the large financial transaction.
Merger Details
One of the concerns that their clients have raised is the conflict of interests from both firms. As a temporary solution, Booz & Co. will let go some projects that may cause issues with the merge. While talks are currently underway, a vote on the matter won’t happen until December 2013. PWC is expected to keep most of Booz & Company’s partners and clients.
Out of the two key consulting firms, PWC has the larger fiscal capacity due to its reported earnings of 32 billion dollars for 2013. Analysts estimate that Booz & Company’s earnings were at 1 billion dollars. Over the past 10 years, PWC has been busy heavily developing the consulting side of its operations after a deal with IBM in 2002. By purchasing Booz & Co, the firm hopes to fast track the growth of the firm. Currently, PWC’s consulting operations contributes to over 25% of the company’s annual earnings.
Plans of Expansion
In the 3rd quarter of 2013, PWC announced that they would prioritize the expansion of operations globally. Actions for this plan will happen over the course of 3 years. The firm has allocated a 1 billion dollar budget for the expansion. How PWC will integrate the merge with Booz & Company in its plans is still yet unknown.
Deloitte, one of PWC’s main competitors, has previously done the same thing and bought out firms such as: Altos Management Partners, AJM Petroleum Consultants, Jackson Browne, Access Economics. Clear Carbon Consulting, and DOMANI Sustainability Consulting. This time, to the public’s surprise, Deloitte did not follow after PWC after their purchase of Booz & Company.
Concerns About the Merger
There are several concerns that the public has about the merger. Most of these issues are related to auditing. SEC former chief accountant, Lynn Turner, mentions the following in an interview about the merger:
“Mergers like this do raise a serious question: are the auditors going to serve management, or are they going to serve the best interests of the investing public?”
Later in the interview, Lynn further expounds on this matter:
“If the combined firm agrees not to do consulting for companies it audits, “then you eliminate the conflict,” (said in a doubtful tone). Do you honestly think Booz partners would turn around and vote for this deal if they gave up all of their clients that PwC audits?”
While the details of the merger still being developed, it is certain that Booz & Company is unable to compete with its larger rivals such as McKinsey and Bain & Co. For the mean time, before the votes take place, both firms will continue to work with their clients and provide consulting services.