E&Y, PwC and KPMG also target Roland Berger takeover

02 April 2013 Consultancy.uk

Last week, Consultancy.uk reported that Deloitte was close to a takeover of Roland Berger. The accounting and consulting firm would be in extensive negotiations with the management team of the Germans. Meanwhile, more details regarding the acquisition of the strategy consulting firm have been leaked through international media in recent days. Ernst & Young, KPMG and PwC would also have mixed in the fight, even though Deloitte still has the best chances.

According to the platform 'Capital.de' Ernst & Young and PwC have joined the bidding for Roland Berger Strategy Consultants, a fact which is also supported by the French platform 'Consultor'. The revelation is however slightly inconsistent with earlier messages from among others the German newspaper 'Frankfurter Allgemeine Zeitung', which claimed that Ernst & Young and KPMG had infringed themselves into the discussions. Both sources base their claims on 'insiders' involved in the talks. On a positive note, the large majority of media do agree on one point: the advisory division of Deloitte - Deloitte Consulting - has the best papers for an acquisition.

Roland Berger Big4

Preference for Deloitte

Media reports suggest that - of the Big Four firms - Roland Berger partners would have a clear preference for Deloitte, stating that its better reputation in the consulting marketplace gives it an edge. In addition, Deloitte's strategy consulting offering is larger and deeper, also as a result of its recent acquisition of Monitor.

Chance of acquisition higher

According to analysts, the probability of a successful acquistion is substantially higher than 2,5 years ago, when the merger between Deloitte en Roland Berger was called off at the last moment. Three reasons stand at the heart of the argumentation. Firslty, Roland Berger recently spent a lot of money to support its international expansion plans. Although expansion has been substantial, with recent office openings in o.a. Manama, Bahrein, Beirut, Doha, Lagos en Seoul, a number of expansion steps have not yet monetized. Media reports hint that in particular the expansion in the US and the strengthening of presence in Zurich and Singapore have proven very costly.

Secondly, the crisis has put a large strain on the strategic growth plans of Roland Berger and partners are wondering whether or not organic growth can realize the long-term objective of seriously competing with the American market leaders McKinsey & Company and Boston Consulting Group.

Thirdly, and perhaps most importantly, the founder of Roland Berger would now be more positive against selling the firm. During the previous negotiations he reportedly found the top management of Deloitte, "arrogant" as he later described them. American media suggest that Deloitte has this time round used a more careful and constructive approach. Similar to the previous round of discussions, two hard conditions for Roland Berger are 'significant autonomy' within Deloitte and a company name that maintains the Roland Berger brand. Both firms have allegedly agreed to use 'Roland Berger Strategy Consultants Deloitte', similar to the 'Monitor Deloitte' approach following the Monitor acquisition.

Both Deloitte and Roland Berger declined to comment to Consultancy.uk, stating that they never comment on acquisition speculation. In the coming weeks Consultancy.uk will continue to closely follow the case.

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