John Fowler, Big4.com
November 26, 2010
The Financial Times of London is reporting that while Roland Berger’s 170 partners overwhelmingly voted to abstain from their firm’s merger with Deloitte Consulting, Deloitte still continues to pursue the deal.
The Financial Times reports that, “Deloitte Touche Tohmatsu has not given up hope of one day forming an alliance with Roland Berger Strategy Consultants.”
John Connolly told the Financial Times: “I would hope that at some stage our friends in Roland Berger would have a rethink about this and we would be able to resume the plans.”
Roland Berger’s partners majority voted against the merger, which shows their desire to stay independent and prohibit consolidation which could be a good alternative to McKinsey in Germany. The combined firm’s revenues of about $2.8bn-$3bn and a commitment for substantial extra investment would be in line with Deloitte’s ambition of displacing McKinsey as the leading name in strategic consulting.
Apparently Deloitte was itself surprised by this majority No vote, after the founder of the firm Roland Berger, agreed to put his own money of $67 million and attract additional capital to keep the firm independent. Mr Berger is no longer involved in an operating executive, but is still a significant shareholder and honorary chairman. Apparently, the partners then backed Berger’s proposal ahead of Deloitte plan. One person close to their deliberations said the founder’s plea had had “an emotional impact”.
So on the one side is a potential alliance and cashing out by selling to the largest accounting firm on the planet with considerable resource and complementary strengths, not to mention the chance to really build an international consulting firm within Deloitte to meet client demands. And on the other hand is the chance to be independent and pursue a high-end strategic consulting practice without any dilution or moving down the prestige scale; and certainly stay away from any catastrophic auditor liabilities in the future.
We think that what is going to have a chance to change this difficult decision is money. If Deloitte shows enough dough to extinguish any concerns, and make an offer that the Roland Berger cannot refuse, this deal will go through. Without that financial carrot and perhaps other concessions, the Roland Berger partners will likely pursue an independent path and take all ups and downs which comes from being on their own.
In any case, this situation has still not gelled fully, and there are certainly more twists and turns to come in the very near future.