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By Julie Steinberg and Tess Stynes
Auditing firm PricewaterhouseCoopers agreed to buy Booz &
Co. in a deal under which Booz is expected to expand PwC's
consulting capabilities.
The merger will allow PwC to tap into management consulting firm
Booz's experience developing strategies for clients. PwC has
previously focused more on executing strategies, rather than
developing them, for its clients.
Financial terms weren't disclosed for the preliminary deal,
which requires approval by Booz's partners as well as anti-trust
regulators. The Booz partner vote is set for December.
Consulting is increasingly becoming a larger part of accounting
firms' mandates. At PwC, advisory revenue rose 8% in fiscal year
2013, versus 1.4% for its assurance and audit business.
While PwC is larger than Booz overall, with $32.1 billion in
global revenue for the fiscal year ended June 30, Booz's business
in strategy development is "larger" and "better-established," a
person familiar with the deal said. Overall, Booz employs roughly
3,000 people, while PwC has more than 184,000 employees.
In an email sent to Booz alumni Wednesday morning, the firm's
two top executives said Booz had considered "our own current scale
and position" as a factor in the decision to merge.
The email, which was reviewed by The Wall Street Journal, also
said "we are seeing considerable consolidation globally." Booz has
done two acquisitions of its own in the past 10 months.
One potential issue for the deal: PwC avoids doing management
consulting for any of its audit clients. So Booz partners who do
work for PwC audit clients might have to give up business,
generating concerns about the deal.
There aren't likely to be significant layoffs, said a person
familiar with the matter, but the firms are still working through
the details of the merger and haven't made any final decisions.
Booz & Co. was formed after Booz Allen Hamilton separated
its corporate consulting arm from its bigger government advisory
business in 2008. The government advisory unit retained the
original name after the parent company sold a majority stake in the
unit to Carlyle Group LP (CG).
Booz & Co. had revenue of about $1.4 billion in 2012, most
of which stemmed from strategy and operations consulting, estimates
Tom Rodenhauser, a managing director at Kennedy Information, a
market-research firm in Keene, N.H. That figure is up from about
1.2 billion in 2011, he says.
Earlier this year, The Wall Street Journal and other media had
reported that consulting giant Accenture PLC (ACN) was in talks to
acquire smaller rival Booz & Co. At the time, the Journal also
reported that it wasn't clear whether there were other potential
buyers.
-Joann Lublin contributed to this article.
Write to Julie Steinberg at Julie.Steinberg@wsj.com and Tess
Stynes at Tess.Stynes@wsj.com
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