Acquisitions in consultancy are always interesting, often giving a clearer signal of a firm’s direction than their public announcements. And it’s always encouraging for those of you working hard to build up your own consultancy practices to know that there are buyers out there should you feel the need to cash in.

Sometimes though, an acquisition has even more significance. I was particularly struck by KPMG’s recent acquisition of EquaTerra, the specialist sourcing adviser.

Sourcing advice has, of course, recently been a great growth area in consultancy. However, firms such as EquaTerra, with their emphasis on outsourcing, have always stood a little apart from the throng because so much of their advice concerns the activities of other consultancies—they are a “meta-consultancy,” if you like. And this, of course, ties in very strongly with the branding of the born-again Big Four consultancies, with their emphasis on being “client-side advisory” firms, the ones who sit on your side of the table and help protect you against those wily outsourcing types. Indeed, while EquaTerra was recently ranked No. 2 in the International Association of Outsourcing Professionals’ list of the World’s Best Outsourcing Advisers, KPMG managed a respectable fourth position in its own right.

But consulting has always been a fluid, multi-tentacled entity. The Big Four have always been consistent about never wanting to repeat the wild ride of the 1990s, which saw them almost become absorbed into the IT services and outsourcing industry. But if consultancy had a motto, it would probably be “never say never,” and I can’t think of many industries which are feebler at resisting client demands.

This acquisition is a different matter. This is as final as it gets: there is really no going back now. It will be interesting to see how the relationship between KPMG and the firms it will increasingly be evaluating, such as Accenture and IBM, develops over the coming years. These are entities which will still have a deep commercial interest in going toe-to-toe with KPMG in many areas of its business. But KPMG is sending a strong signal that it no longer wishes to be seen in the same light as these former rivals: KPMG is the adviser—the others are the mere advised-upon.

This kind of jockeying has been going on for a long time, as have the constant questions over the independence of firms whose commercial centre of gravity lies in outsourcing. It is a bit of a caricature to suggest that any Accenture consultant advising on any matter whatsoever has a removal van revving up around the corner ready to cart off large chunks of your organization to India. But even if these questions are resolved, it’s going to be increasingly hard for clients to see those firms’ consultants in quite the same way. You could also pose the independence question the other way—can you trust your “independent advisers” not to subtly queer the pitch for rival firms in other areas of the client’s business?

If there’s one thing clients really struggle with, it’s the heterogeneous and multilayered nature of consultancy. This is grossly unfair, since consultancy is primarily trying to cope with client expectations that have created this hydra, but there you are. Many firms as a result present radically different faces to different clients, and opportunities for cross- or up-selling often go untouched because, frankly, it would only confuse the relationship.

Consultants obviously want to offer as full a service as possible, but there’s a danger of ending up like Pooh Bah, the multi-talented government official from The Mikado:

“As First Lord of the Treasury, I could propose a special vote that would cover all expenses, if it were not that, as Leader of the Opposition, it would be my duty to resist it, tooth and nail. Or, as Paymaster-General, I could so cook the accounts that, as Lord High Auditor, I should never discover the fraud. But then, as Archbishop of Titipu, it would be my duty to denounce my dishonesty and give myself into my own custody as First Commissioner of Police.”

We live in a world where brand identity is rapidly becoming the only hold firms have on customers, and where it is increasingly vulnerable to provide opinions that are not merely public but globally broadcasted. Several people have simply quit the hotel business altogether rather than cope with the caprices of TripAdvisor. And with the rise of sites like glassdoor.com, TripAdvisor is coming to us all.

Consultancy firms will increasingly be asked not what they do but who they are. KPMG is making huge strides towards defining in the clearest terms what the professional services firm of the 21st century looks like, and in the process staking a claim to a rather large chunk of the consultancy market. KPMG will also be playing a big role in determining where quite large chunks of other firms’ revenue come from. Consultants always seem to manage to conduct their turf wars in the most gentlemanly manner, but I wonder if this time the gloves may be about to come off.

Source:  Top-Consultant

KPMG LLP (US), KPMG Holdings Limited (UK) and KPMG International have signed an agreement to acquire the business of advisory firm EquaTerra. The acquisition creates one of the broadest global sourcing and shared services advisory offerings across the Americas, Europe and Asia Pacific.

Combining KPMG’s practice and EquaTerra, two of the world’s top-ranked global sourcing organizations, the transaction is consistent with the KPMG network’s growth strategy, focusing on organic and inorganic opportunities in select high-demand market sectors. Terms were not disclosed.

As organizations transform their operations to compete in today’s complex business environment, EquaTerra’s highly experienced professionals, combined with the KPMG network’s deep market presence and objective shared services and outsourcing advisory team, will provide clients with a full life-cycle of capabilities – from strategy through to optimization – for companies seeking to reduce costs and improve effectiveness and efficiency.

“EquaTerra is an ideal fit for KPMG and we look forward to welcoming the EquaTerra team to the KPMG network family,” said Timothy P. Flynn, Chairman, KPMG International. “Through this acquisition, clients of KPMG member firms will benefit from the addition of a market-leading sourcing adviser to help them transform their organizations into more flexible enterprises in a way that meets today’s complex market demands.”

Mark Toon, former Chief Executive Officer of EquaTerra and current KPMG LLP principal, said that the deal adds value for clients of both organizations. “Joining a network with KPMG’s capabilities and global scope provides great opportunities for our employees and clients,” Toon said. “KPMG’s extensive sourcing experience, its Big Four market presence and its reputation for relentless execution is an ideal complement for EquaTerra’s business transformation capabilities and highly respected reputation in the shared services and sourcing advisory sector.”

John Veihmeyer, KPMG LLP (US) Chairman and CEO, noted that the acquisition helps address changing client needs as the outsourcing services market continues to evolve. “EquaTerra’s tools and capabilities speak directly to clients’ desire to move beyond one-off outsourcing activities and develop comprehensive sourcing strategies that deliver real value across their organizations,” Veihmeyer said. “This is part of our strategy of building large-scale transformation capabilities to help organizations as they address the realities of a new global marketplace.”

The name “EquaTerra” means “level ground,” which aligns well with KPMG’s philosophy of providing an objective sourcing and shared services advisory approach. This is also consistent with KPMG’s focus on bringing clients and service providers together in a collaborative environment to create innovative delivery models and provide sustainable value to the business.

John Griffith-Jones, Co-Chairman, KPMG Europe LLP, said the acquisition will allow KPMG member firms to help clients manage large scale, cross-border transformation efforts. “KPMG member firms provide a full suite of services for enterprise executives seeking to optimize their organization. The acquisition of EquaTerra complements these existing capabilities and deepens KPMG member firms’ shared services and sourcing expertise, Intellectual Property and services.”

“The company is also led by a management group with extensive sourcing industry experience supported by a deep bench of global leadership talent. These are invaluable attributes crucial to succeeding in this competitive market segment,” added Griffith-Jones.

EquaTerra is ranked No. 2 on the International Association of Outsourcing Professionals’ recent 2010 list of the World’s Best Outsourcing Advisers. It serves clients throughout the Americas, Europe, Middle East, Africa and Asia Pacific, providing deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes.

This broad geographic and industry-specific footprint will enhance the ability of KPMG professionals to help companies transform their service delivery models and address change management issues, centralize and optimize capabilities, outsource functions, and create a sustainable governance and performance management model.

Source: Top-Consultant