Former Buck Consultants business returns to independence from Conduent
Following two decades of serving under larger parent companies, the business formerly known as Buck Consultants has returned to independence. The consulting outfit generated revenues of around $278 million in the latest financial year, but was deemed non-essential to Conduent’s business, while its human resource consulting and actuarial outsourcing businesses in Canada and the UK has also been purchased by private equity firm H.I.G. Capital.
A growing M&A trend within the private equity sector is seeing key operators within the market increasingly looking to grow their share of deals within the management consulting space. The industry has already become integral to the spike in businesses looking to implement new, potentially disruptive technology in their business plans – a trend set to continue in 2018 – making consultancies lucrative opportunities for private equity backers.
In recent years this has seen a succession of private equity firms take up large stakes in consultancies – perhaps most famously embodied by The Carlyle Group’s 51% stake in PA Consulting Group late in 2016. That same year, three investor groups had also invested heavily in AlixPartners. Last year, the activity continued, as consulting firm Capco was bought by a fund managed by Clayton, Dubilier & Rice (CD&R) – acquiring a 60% interest – returning the firm to independence, having previously been owned by Fidelity National Information Services (FIS).
The latest chapter in this on-going saga has seen the consultancy formerly known as Buck Consultants similarly return to independence via a private equity injection. The return to independence for the firm comes after over 20 years of being owned by a succession of parent companies. Before being acquired by Mellon in 1997, Buck was an independent company. Affiliated Computer Services (ACS) then purchased Buck in 2005, before ACS was itself acquired by Xerox for $6.4 billion four years later. In 2014, Xerox brought Buck under its branding, before the professional services firm moved to separate into two independent, publicly-traded companies. The process saw it spin off its human resources arm, which included Buck Consultants, into a new business process services company called Conduent HR Services.
Conduent’s consulting wing was considered to be a ‘non-core’ aspect of its business, and as the firm looks to divest from such operations, it was sold along with Conduent’s UK and Canadian human resources wing to H.I.G Capital. These businesses represented $278 million of the company's 2017 revenue, and now, as the consulting firm aims for rapid expansion financed by the private equity investment, their backers will also hope to tap into the profitability of the fast growing management consulting market.
The transaction, which is subject to certain regulatory approval and customary closing conditions, is expected to close in the third quarter of 2018 for an undisclosed fee. The divested business will continue to be led globally by Steve Coco, who is currently global consulting leader at Conduent. It is not clear yet which name the independent firm will trade under, and Conduent will still retain certain proprietary offerings and services connected to its core technology business after the deal, including human resources outsourcing, total benefits outsourcing, BenefitWallet and RightOpt.
The remaining business of Conduent is continuing to work towards a divestment from non-core businesses of $500 million this year. According to Christine Landry, Group Chief Executive, Conduent, Consumer & Industrials, “With this divestiture, our Human Resource Services business is now built around a diverse set of services supported by a portfolio of digital business platforms. Together with our recent leadership hires and platform improvements, we are well positioned to help our clients modernise their HR processes, create seamless experiences for their employees and accelerate our growth in HR services.”
