D-Day for Roland Berger: independence or EY

18 December 2013 Consultancy.uk

Update 21:00: The partners of Roland Berger have chosen, in large majority, to continue independently. This prevents a sale of the firm and let Europe preserve its only pure play strategy consulting firm in a market that is dominated by American players.

Update 19-12-2013: Roland Berger Strategy Consultants remains independent.

Today is D-Day for Roland Berger. Its roughly 250 partners have flown in from all over the world to vote on its future. According to insiders, the decision has already been pre-cooked by the global governance. The strategic consulting firm must remain independent. Today, it is CEO Burkhard Schwenker task to convince the majority of the partners. If they vote against it, Roland Berger is poised for a merger with Big4 accounting and consulting firm EY.

Over the past months, Roland Berger has been through an extensive ‘strategic reorientation’. With approximately 2,700 employees worldwide, it finds itself in the middle of the strategy consulting landscape, a position which provides challenges in terms of scale and footprint towards international clients. Market leaders McKinsey, BCG and Bain are significantly larger, A.T. Kearney and Booz are or comparable size, while Arthur D. Little and OC&C Strategy Consultants are smaller but also more niche players.

Consultants per Strategy Consulting Firm

In addition, the crisis in combination with the expensive international expansion plans pursued in the past years have put pressure on Roland Berger's financial position. These two factors have triggered the German-based advisory firm to review its strategic options earlier this year.

Following the strategic review, the global management team is clear on the best way forward: independence. They see sufficient future potential as a stand-alone firm, with the condition that a new focused strategy is followed and that several internal measures are taken. In addition, they feel that the alternative option, a sale to one of the Big4 competitors, would mean the end of a unique heritage and not beneficial to Roland Berger partners and employees. 

If the partners vote for independence, then this will be a huge blow for EY. For months, Roland Berger looked to be heading towards Deloitte, which had earlier this year reiterated its interest after a previous deal in 2010 was called off at the last minute. Big 4 rivals quickly followed Deloitte's interest, backed by the fact that a merger between the two would mean that Deloitte, which already has a major volume advantage in the consulting landscape*, would further expand its market advantage.

Roland Berger

However, over the past months the cards have shifted massively following the news that Booz & Company had been acquired by PwC, at least, if the Booz partners ratify the deal. This is expected to be decided by the end of this year. 

Following this news, PwC, logically, dropped its interest in Roland Berger and EY stepped up its efforts. According to the German media, EY has done a serious bid that is considered as an alternative option. Based on the clash of cultures between Big 4 firms and strategy consultants, the partners are not overly enthusiastic about the prospect.

Roadmap going forward
If Roland Berger remains independent, then it will have to tackle two main questions. How can we serve global customers with a smaller footprint than the Big 4 competitors? And how can we maintain a position in the top of the league with a smaller scale? Insiders close to the matter have leaked that there are four major that are the heart of the possible plan. Firstly, Roland Berger will rationalize its offices, shutting unprofitable offices and merging some offices with others. Secondly, a large scale cost savings program will be rolled out internally, that will impact the support services and low performing partners.

Thirdly, Roland Berger’s functional departments, Competence Centres, will be restructured. This includes merging existing functions for more client focus and efficiency – recently a foreboding was done by the merger of the Restructuring and Corporate Finance centres – and the launch of new centres in areas with high growth, such as Big Data. Finally, the consulting firm will carry out various changes within its financial governance, including lower interest rates for founder Roland Berger (he has loaned millions to the company), a new profit distribution framework for partners and changes in the structure of partner equity model.


If these measures are implemented, Roland Berger’s board is convinced that the firm has a bright future ahead of it. It remains to be seen whether or not the 250 partners agree with the plans. Consultancy.uk will report on this, when more is known.

* Deloitte owes its advantage within the consulting landscape to the fact that it has never divested its consulting branch. Early 2000, PwC, KPMG and EY sold their consulting practices to respectively IBM, Atos and Capgemini.


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