As reportd by both WSJ and FT earlier, Booz and ATK are about merge to better compete with not only with big houses like Accenture and IBM Global Services but also provide a better reach outside th US, particularly in emerging BRIC an Middle Eastern countries.
Booz & Co. is exploring a possible merger with rival management consultancy A.T. Kearney Inc., according to people familiar with the situation, in a deal that would give the two midsized companies greater scale but still leave them smaller than the market leaders in a highly competitive industry.
The talks "have been going on" for a while, one person said. A merger would require approval by partners at both firms.
The merged concern would form the world's 14th-biggest management consultancy and seventh-biggest management strategy consultancy, according to Tom Rodenhauser, an industry analyst and editor of newsletter Consultants News.
But the new firm would still lag far behind major players including Deloitte LLP, McKinsey & Co. and Accenture Ltd. in an industry where scale has become increasingly important in wooing global business.
It wouldn't be the first time the two have flirted. Booz considered merging with Kearney "a half dozen times in the 25 years I was with the firm," one former Booz senior consultant said. "It didn't happen, because so few mergers of management consulting firms work," he added. "There's not a whole lot of value created by mergers."
Combining now would offer Booz additional capabilities in operations consulting, an area where Kearney is stronger, the ex-consultant said.
The talks were reported earlier by the Financial Times. "We always are exploring opportunities," Booz Chief Executive Shumeet Banerji said in a memo to employees after the article was published. He didn't say whether those opportunities include Kearney.
In 2008, Booz Allen Hamilton Inc. separated its corporate consulting arm from its bigger government business. The government advisory unit retained the original name after the parent company sold a majority stake in the unit to Carlyle Group for $2.54 billion.
Management consultancies suffered in the recession, as corporate clients pared spending. Last year, management consulting firms saw their average billing rates drop roughly 15%, according to Mr. Rodenhauser, the analyst. Executives say business has picked up this year, though.
A.T. Kearney saw revenue fall to $786 million last year, from about $900 million the year earlier. It has traditionally been strong in retail and automotive industries. In the past few years it has pursued more government business, and expanded internationally in places such as the Middle East and Eastern Europe.
Kearney is best known for its advice on operations and strategy—advising companies, for instance, on how to acquire goods and services, and make supply chains more efficient. The firm has been a private partnership since 2006, when its partners bought it back from Electronic Data Systems, which purchased the firm in 1995. It has 2,700 employees, including about 240 partners, in 37 countries.
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