consulting trends: how to tackle the differentiation

Consulting Trends: How To Tackle The Differentiation Challenge in TAS

Tuesday July 23, 2019

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Today’s Speaker

Tomek JankowskiSENIOR ANALYST, MANAGEMENT CONSULTING RESEARCH

ALM CONSULTING INTELLIGENCE

ConsultingResearch@alm.com

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ALM Consulting Intelligence Taxonomy

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Agenda

• Market Trends

• Market Context

o Evolution of TAS-acquisitions consulting

o Evolution of consulting business models

• The ALM Vanguard, Key Findingso Capability drivers

o Market landscape

The ALM Vanguard, Transactions-Acquisitions Consulting 2019

Market Trends

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Buyside M&A Trends

Market Context

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Definition of Consulting to Transactions -- Acquisitions

• Deal strategy and inception • Business model/ customer focus strategy • Portfolio/capital structure strategy • Early vetting (including early-stage due diligence) • Target sourcing and assessment, • Negotiations and the LOI • Stakeholder management/strategic communications • Valuation • Benchmarking & economic consulting • Execution-phase due diligence (financial/quality of earnings, commercial, operational, legal, IT,

HR/talent, cyber, etc.) • Risk assurance and management (including regulatory, compliance & reporting, etc.) • All related sector/industry specs & strategy • All technology aspects (e.g., platforming, analytics, the data room, extra-deal offerings which are

increasingly common in transaction advisory like digital transformation, etc.) • Tax impact/strategy • Finance/funding strategy (including IB services) • Legal/disputes & litigation (including TSA negotiation and dispute resolution, etc.) • Integration/implementation services (including change management and short-term deal-duration

offerings like interim services, medium-term offerings like managed services, and longer-term ones like outsourcing and, increasingly, as-a-service offerings)

• Post-deal/post Day 1 services: entity/deal adjustment and goal/value realization "shepherding" services, as well as other extra-deal offerings like use of CoEs, innovation and tech collaboration centers, client peer networks/panels, and etc.

Inception

Agreement

Execution

Implementation

Post-deal

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The War for Projectshare

Strategic Review & Planning

Sourcing & Target

Assessment

Execution: Valuation, Due

Diligence, Integration

Planning

Implementation, Integration, Change Mgt.

Value Realization, Post-Deal

Adjustments, Lifecycle

Relationships

Letter of Intent (LOI)Law firms

Technology, SI &

Outsourcing firms

• Firms are trying to “own” as much of the deal process as possible

• Being pushed by clients as much as the desire to expand revenues, client relationships

• There are limits to how much projectshare any firm can achieve:

o Regulatory/legal limits (e.g., investment banking, legal services)

o IB, legal advisory serviceso Client penetrationo Brand, reputation

o Rising sophistication of clients

§ Internal corporate development/M&A teams

§ Private Equity building out internal advisory teams

Investment Banks

Day 1 Post-deal relationships

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The Challenge of TAS Consulting Services

Where’s the margin?

Deal process

Later stage:• Managing complex integrations• Interim/ managed services• Post-deal adjustments • Longer-tail relationships

Early stage:• Sourcing/ targeting services;

matchmaking• Target vetting, war/scenario-

gaming• Pre-LOI due diligence services• Transformation strategy

services • As-a-service M&A services

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Evolution of TAS Consulting Business Models

New models focus on need to help clients achieve expected outcomes

Approach:

• Closely integrated teams• Fast-track process• Process automation• Transformation/ optimization

Resources:

• New skill sets• Vertical, horizontal, process expertise• Ecosystem• New talent -- expertise• Arms & legs

Consulting:

• Complexity management• Change management• Cross-border capabilities • Leveraging other domains: strategy,

GRC/risk assurance, tax, industries, legal, litigations & disputes, restructuring, etc.

Assets:

• Increasingly elaborate diagnostic tools• Platforms (In-house & through alliances)• Innovation, client collaboration centers• Interim & managed services – even outsourcing • Productization of assets: expansion of as-a-service offerings

Key Findings

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TAS Go-to-Market Strategies: 1. Strategy firms

Traits:

• Deep board relationships

• Brought in to deals much earlier than other consulting firms

o Match-maker services

• Moving downstream, building stronger capabilities for implementation phase

• Moving beyond commercial due diligence, straying into IT, HR as well

• Rarely compete with non-strategy consulting firms

Challenges:

• Relegated to part of the deal process

• Cost-point

Capability Drivers

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TAS Go-to-Market Strategies: 2. Full Process JuggernautsCapability Drivers

Inside an Asda supermarket in Keighley, West Yorkshire, UK. Source: By Mtaylor848 - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=8918160

Traits:

• One-stop-shop: Attempts to take ownership of as much of the process as possible

• Usually auditing-heritage firms

• Rely on deep horizontal, vertical, technical, regional and process expertise

o Seek tech advantage

• Takes the à la carte or “supermarket” approach

• Strengths in complexity, cross-border deals

Challenges:

• Overhead

• Talent

• Regulatory scrutiny

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TAS Go-to-Market Strategies: 3. Process Experts

Traits:

• “Checklist” approach – focus on the

transaction

• Project management key to value prop

o Middle tier clients

o Simpler projects w/ Fortune 1000

• Strong financial capabilities, while building

out operational, IT capabilities

• Often valuation, auditing-heritage firms

Challenges:

• Also forced to invest & expand

• Talent

Capability Drivers

Source: “How to Get a Job as a Wedding Planner” (Blog post) (October 25, 2017). The Campus Career Coach. Retrieved from: https://thecampuscareercoach.com/career-exploration/get-job-wedding-planner#.XRUjx_57lhE

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TAS Go-to-Market Strategies: 4. RestructurersCapability Drivers

Traits:

• Counter-cyclical business model

• Focused on pre-crisis distressed clients

• Competing more directly with the process experts

o Investing to be better able to address needs of top tier clients in key geos

o On Big Four’s radar

• Also typically bring strong economic consulting, benchmarking capabilities

• Brand

Challenges:

• Capability ramp-up

• Talent

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TAS Go-to-Market Strategies: 5. Specialists & Boutiques

Traits:

• Usually either former “Big Name” consulting firm partners or industry retirees

• Partner-heavy models, few worker bees

• Very focused:

o On a certain industry

o On SMEs

o Or a single part of the TAS process

• Brand

Challenges:

• Purely advisory role

• Must be good at ecosystems

Capability Drivers

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TAS Go-to-Market Strategies: 6. TechnologistsCapability Drivers

Traits:

• One of four primary approaches:

o Implementation vendors/partners

o Digital transformation opportunity

o Platforming

o Interim/ managed/ outsourcing services

• Used to compete based on analytics capabilities

o Now also utilizing cloud, AI, machine learning, RPA, etc.

Challenges:

• Like boutiques, only able to access certain parts of the deal process

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Capability Drivers

Key Success Factors in TAS-Acquisitions Consulting 2019

Client outcomes

Deal lifecycle

People

Glocal

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ALM Vanguard Methodology

Communications & Change Management Consulting 2019Depth Criteria

Discovery

Needs Assessment

External Market Insight

Internal Client Insight

Design

Strategy

Operating System

Management System

Deliver

Project Management

Capability Development

Enabling Tools

BreadthCriteria Geography Industry

Management Consulting§ Strategy§ Organization§ Talent & Workforce§ Technology

Other§ As-a-Service & managed

services§ Professional networks§ Training

Scale4 – very strong3 – strong2 – medium1 – weak0 none

Market Landscape

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2019 ALM Vanguard Map

ALM Vanguard of Transactions-Acquisitions Consulting Providers

§ TAS consulting market crowded, mature, fragmented

§ Moving beyond process§ Differentiation through

combining “pre-packaging” with custom services.

§ Client penetration and downstream relationships

§ Ecosystems

§ The focus is on the processon helping clients achieve their anticipated value

§ Outlook – strong M&A markets seen going forward but highly susceptible to economic, market volatility

NOTE: The ALM Vanguard, Change Management Consulting is published annually in March

Market Landscape

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The ALM Vanguard: Transactions-Acquisitions Consulting 2019

A.T. Kearney

Accenture

AlixPartners

Alvarez & Marsal

Ankura Consulting

Group, LLC

Aprio

Bain & Company

Baker Tilly

BCG

Crowe LLP

Deloitte

Oliver Wyman

PA Consulting

Point B

Protiviti

PwC

Roland Berger

Rothschild & Co.

RSM International

Stax

Stout Risius Ross, Inc.

Valley Biggs Technology

M&A

West Monroe Partners

Providers Covered

Maribeth BuchananStrategic Accounts Manager+1 (212) 457-9167mbuchanan@alm.com

Jim DoyleStrategic Accounts Manager+1 (212) 457-9171jdoyle@alm.com

EY

FTI Consulting

goetzpartners

Grant Thornton

Houlihan Lokey

hu Consultancy

KPMG

L.E.K. Consulting

McKinsey &

Company

North Highland

Oliver Wyman

Thank YouFor more information or questions, please contact:

Tomek Jankowski+1-(212) 457-9175 | tjankowski@alm.com

Or: ConsultingResearch@alm.com