consulting trends: how to tackle the differentiation
TRANSCRIPT
Consulting Trends: How To Tackle The Differentiation Challenge in TAS
Tuesday July 23, 2019
2
Today’s Speaker
Tomek JankowskiSENIOR ANALYST, MANAGEMENT CONSULTING RESEARCH
ALM CONSULTING INTELLIGENCE
3
ALM Consulting Intelligence Taxonomy
4
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
6
Buyside M&A Trends
Market Context
8
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
9
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
10
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
11
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
13
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
14
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
15
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
16
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
17
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
18
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
19
Capability Drivers
Key Success Factors in TAS-Acquisitions Consulting 2019
Client outcomes
Deal lifecycle
People
Glocal
20
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
21
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
22
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) [email protected]
Jim DoyleStrategic Accounts Manager+1 (212) [email protected]
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 | [email protected]