Arthur D. Little returns to independence following partner buy-out
A management buy-out has seen historic management consulting brand Arthur D. Little return to independence. The brand apparently did not fit with the future plans of former owner Altran, following several years of disappointing financial results.
The closing of a transaction on December 30 means that Arthur D. Little will cease to be part of the Altran Group before 2012. It is unknown how many partners are involved in this global buy-out. The sale of Arthur D. Little does not come as a surprise to analysts, as the potential divestment has reportedly been on the cards for over six months.
Following an Altran shareholder meeting in June, when CFO Laurent Dubois mentioned that the firm was “evaluating its strategic options for Arthur D. Little.” CEO Philippe Salle went on to further state in November that “a strategy consulting office does not fit in our portfolio anymore,” making it clear that Altran’s new growth strategy did not have a place for Arthur D. Little.
The haste with which Altran seems to have offloaded the historic consultancy seems to have been driven by the flagging financial performance of Arthur D. Little since the recession. As with the wider consulting industry, Arthur D. Little was heavily hit by the crisis in 2009, and global turnover dropped in the following financial year by an estimated 40%. The firm has seen a muted recovery since, and even endured decreasing turnover year-on-year in Q3 this year falling to €25 million against €26.4 a year earlier.
Amid this, Arthur D. Little added a minimal percentage to Altran’s global revenue of more than €1 billion, leaving Altran highly amenable to a spin-off. Illustrating this, according to firm’s chairperson, this sale is “the first practical application of our renewed strategy.”
Since 2002 part of Altran
Founded in 1909 by MIT chemist Arthur Dehon Little, Arthur D. Little is one of the world’s oldest international management consulting firms. Originally headquartered in Boston, Massachusetts (now the home of The Boston Consulting Group and Bain & Company, among others), it is said to have pioneered the concept of contracted professional services.
Despite its storied life, Arthur D. Little has been struggling financially long before the recession. In mid-2001 big financial problems saw it undertake a search for an acquisition or merging partner. After failed negotiations with Mercer, Monitor and PA Consulting Group, the bulk of the consultancy joined Altran in April 2002. Niche branches of the firm situated in the US were meanwhile sold to other advisory firms, including Associates and Navigant Consulting.
Following Altran’s exit, Arthur D. Little still has around 500 consultants scattered over 26 offices in over 20 countries – although last year the renowned consultancy did lose almost all its partners in the Netherlands. The move saw 15 advisors found Quintel Strategy Consulting – a consultancy which was acquired by A.T. Kearney in January 2011.
Meanwhile, an in-firm exodus has seen multiple advisors switch to rival consultancies. For example, Tyo Collot d’Escury and Jochem Moerkerken moved to Roland Berger. As Arthur D. Little prepares for a new lease of independent life, then, its new management team has its work cut out if it is to rebuild its diminished operations.
