Why consultancy won’t turn into an oligarchy
The talk has been of “a big four” taking over the consultancy market but I don’t think you’ll see the sort of consolidation that took place in the accountancy sector, even in the long term.
What is happening instead is a swing towards an interdisciplinary model because clients will increasingly require firms that can deliver everything (just look at the way frameworks such as the government’s Buying Solutions are going).
The problem is that while the big guys, the traditionally QS-based firms, have weathered the recession and are seeking to expand their services, particularly into design, many of the smaller outfits are on life support.
McBains Cooper is looking for growth through acquisition but I’ve seen some scary-looking balance sheets. I’m getting more offers across my desk than I was six months ago, but there’s not much of real interest.
The banks have propped consultancies up but things could change in the next six months. When the commercial market starts to move again, firms clinging on by their fingernails could be forced to look for a more robust financial partner.
We haven’t seen the interest from the big European firms or private equity groups that some expected either. I think they’d rather wait six months and pay 10% more but without all the risk. Some have also talked about medium-sized consultants clubbing together to create economies of scale but the problem is that one or more parties generally look to get the upper hand.
Michael Thirkettle is chief executive of McBains Cooper.