MW Transaction Analysis
PwC Agrees to Buy Booz & Company
to Expand Consulting Services
- PricewaterhouseCoopers (PwC) announced yesterday that it will buy Booz & Company. Financial terms of the transaction were not disclosed.
- PwC, based in New York, currently has more than 184,000 employees in 157 countries.
- If the Booz acquisition is completed, PwC will have an additional 3,000 people in 57 countries. Conflicts of interest provisions of the Sarbanes-Oxley Act would likely require the firms to eliminate conflicts between audit and consulting clients prior to the transaction being completed. This could reduce staffing and geographic coverage.
- Booz partners are scheduled to vote on the acquisition in December.
Audit Firms Seek Growth Through Expansion Into Consulting
- PwC is one of the world's Big Four audit firms, the others being KPMG, Ernst & Young and Deloitte. With the exception of Deloitte - which never stopped emphasizing consulting services - large audit firms largely divested or separated their consulting services from their audit services in the wake of Sarbanes-Oxley in 2002.
- For example, PwC sold its consulting business to IBM in 2002.
- In recent years, audit firms have been re-investing in consulting services as revenue growth in their core businesses has slowed. All of the Big Four have made several acquisitions designed to expand their consulting businesses and global footprint in recent years.
- The two firms are positioning the acquisition as a merger. But with annual revenue of $32 billion reported for 2012, PwC dwarfs Booz, whose annual revenue has been estimated at about $1 billion.
martinwolf was not the advisor in this transaction.
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