Solucom set to acquire large share of Kurt Salmon

24 November 2015 Consultancy.uk

French consulting firm Solucom is on the verge of acquiring a large share of Kurt Salmon, excluding the retail and consumer goods advisory units. If the deal goes ahead, roughly 750 consultants in France, Switzerland, Belgium, Luxembourg and Morocco will transfer to Solucom, as well as employees based across four offices in the United States.

With over 1,500 employees in France, the UK and three other countries in the EMEA region*, Solucom is one of the larger management and IT consulting firms in Europe. The firm was founded in 1990 by Michel Dancoisne and Pascal Imbert, who still hold a controlling interest in the firm, and over the past 15 years the company has evolved from a telecoms and IT security specialist in the early years to a diversified player offering services across the advisory landscape.

In 2011, at the height of the financial crisis’ aftermath, Dancoisne and Imbert agreed a bold ambition, aimed at, in the space of four years and against the tide growing Solucom into the largest consulting firm in France. Delving into the numbers shows that, across the board, the execution of the growth strategy has since been impressive. The following year Solucom acquired Alturia Consulting and Eveho (both with a focus on the insurance sector) and Stance (business transformation), while between 2014 and May this year the business advisory poached another three firms: Lumens Consultants (HR advisory), Trend Consultants (retail banking) and Audisoft-Oxea (finance). Expansion was also realised beyond France’s boundaries, with new offices opened in Morocco (2012; organic expansion), the UK in (2015; through the acquisition of London-based Hudson & Yorke) and Switzerland (2015; following the purchase of Geneva-based Arthus Technologies).

Solucom

On the back of the acquisition spree, Solucom can now in call itself one of the larger players in its home-market, an industry valued to be worth just over €4 billion. Building on the expansion path, the firm’s leadership earlier this year unveiled further appetite and growth plans, as part of the new strategic vision, which centres around an accelerated geographic expansion, with the goal of turning Solucom into the industry’s top ranks by 2020 when it comes to size and reputation. Five months after disclosing the plans, one of the first major steps has unfolded, with the acquisition of Kurt Salmon on the brink of being agreed.

Yesterday Solucom announced that it has entered exclusive negotiations with Management Consulting Group (MCG), the parent company of Kurt Salmon and Alexander Proudfoot, to acquire a considerable share of Kurt Salmon. The business in scope of the deal comprises Kurt Salmon’s operations in France, Switzerland, Belgium, Luxembourg and Morocco, as well as the Financial Services and CIO Advisory practices of Kurt Salmon in the United States. The consumer goods and retail consulting activities outside of France, notably Kurt Salmon UK and Kurt Salmon Germany, are not part of the transaction.

The deal is expected to be completed later this year, and if so, ends a long period of uncertainty hanging above Kurt Salmon. The management consultancy has repeatedly been linked as an acquisition target ever since the firm, according to analysts, overplayed its cards back in 2013 and 2014. Kurt Salmon was founded in January 2011 by the merger of Ineum Consulting and Kurt Salmon Associates (KSA). At the time of the merger, Ineum Consulting (formed as a spin-off from Deloitte France's consulting division) had approximately 1,300 employees mainly in EMEA, while KSA’s heritage traces back to the early 1930s in the United States. The merger was designed to bring the new and larger Kurt Salmon economies of scale, paving the way for a more sustainable and profitable level of business, and position the consultancy for international growth.

Solucom set to acquire large share of Kurt Salmon

Globally, the firm had set the goal to become a top 10 global management consulting firm by 2016, said Chiheb Mahjoub a few years ago, while in France, the firm’s largest markets (~500 consultants) the advisory had set the ambition to become a top 3 player by 2017. Continued market pressures, along with challenges fully integrating its European operations, including partners pointing their noses into different directions say insiders, have frustrated the firm reaping the full merger synergies, as well as overall potential. In Q1 this year two of the Big Four giants reportedly showed interest in capitalising on the opportunity, and by May EY came an inch away from buying (parts of) Kurt Salmon – the deal was however blown off late in the negotiations process. The rumours persisted though, and in June this year parent MCG even felt the need to react to the reports in the market, stating that the Board has been approached by “certain parties” and that “discussions are on-going”.

Five months down the line MCG has taken its transparency a step further and confirmed it is close to a deal with Solucom. Last Friday, works councils of both parties met to discuss details, and once concluded, the deal could rapidly be closed, says Solucom. Following integration, Solucom will add a range of strategic and business skills to its portfolio, with in particular Kurt Salmon’s CFO and CIO Advisory practices renowned for its strong track record. The business in scope has a combined staff of 750 employees, generating revenues of €120 million, and is performing relatively well at the moment, with a pro-forma operational margin of approximately 8%.

Kurt Salmon Retail
If the deal goes ahead, Kurt Salmon’s retail and consumer goods practices – which are performing well states MCG – will continue operations as is, with no further details on positioning and branding know at this moment in time. Just last month Kurt Salmon acquired Mobispoke in the US, and rebranded the firm as Kurt Salmon Digital, spearheading the launch of its digital intentions.

Earlier this year Consultancy.uk highlighted the development of Sia Partners, another French-origin consulting firm that is expanding strongly of late globally through acquisitions (e.g. Investance in 2013) and organic growth (e.g. new offices in Japan and North Carolina, US).

* Belgium, Switzerland and Morocco.

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Accenture's push into the creative sector is an identity crisis

18 April 2019 Consultancy.uk

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.