PricewaterhouseCoopers and Booz & Co. have signed a conditional agreement to merge, increasing the Big Four firm's presence in the consulting business.
The transaction is conditional on approval by Booz & Co. partners. Votes are scheduled to take place in December. The deal is also subject to regulatory approvals and customary closing conditions.
“We believe this proposed combination of Booz & Company with our existing assurance, advisory and tax capabilities would create a stand-out professional services organization that delivers first class quality services to a broad range of stakeholders," said Dennis Nally, chairman of PwC International. "In particular, it would give CEOs the opportunity to work with a global consulting team that could provide services from strategy development right through to execution.”
""This potential combination would not only deliver on this innovative value proposition, but would also help reinvent management consulting for the next century,” Booz & Co. CEO Cesare Mainardi said in a statement.
The deal represents a major acquisition for PwC, which has been expanding its consulting business.
“By merging with Booz & Co, PwC has gone for the biggest available prize as McKinsey and BCG are viewed as too big to merge with or acquire, Bain is too specialised, and Roland Berger is out of the equation," said Fiona Czerniawska, managing director of Source Information Services. "This may prove to be a smart move if, as we expect, the other Big Four firms follow suit. So the big questions are what next and what will happen to Booz’s brand? And, what will the rest of the Big Four firms, and Accenture (who may previously have been in talks with Booz) do as a result? One of the main reasons why PwC is merging with a strategy firm is the pressure to do large-scale transformation projects which means that consulting firms need to field an increasingly wide range of resources, from strategy through to technology. However, what is very significant is the size of the potential deal as there are only a very small number of strategy firms big enough and/or have brands strong enough to have an impact on client perceptions, but this essentially propels PwC into the strategy space with Booz’s huge credibility.”
The Public Company Accounting Oversight Board said it would not need to approve of the merger. “The PCAOB does not need to approve the transaction, although we have an interest in it, partly because of the independence issues it raises,” said a PCAOB spokesperson.