June must be Booz month. In 2008, Booz Allen Hamilton made big news when it announced it was splitting its government and commercial businesses, thus creating a new firm called Booz & Company Then, in 2009, Booz & Company revealed that it was buying Katzenbach Partners, a well-known and very well-respected boutique firm in New York launched by former McKinsey & Company partners.
This June, both Booz Allen Hamilton and Booz & Company found themselves in the headlines. Let's start with what we know: The long-rumored Booz Allen Hamilton initial public offering came to light last month. Several industry and financial analysts have chimed in on the $300 million I.P.O., and the overriding sentiment is
the I.P.O. is very good news for The Carlyle Group, which owns 80 percent of BAH. One analyst concludes Carlyle has already earned a 100 percent return on its $1 billion investment.
And while those with ownership interests in BAH stand to benefit, the jury's still out on the I.P.O.'s impact to the firm. For most of its 96 years, BAH has operated as a private firm, and has always been renowned for its culture and its uncompromising investment in its own people, technology and infrastructure. How will that change with shareholders seeking quarterly returns? For one thing, it makes long-term investment a much trickier proposition. And what about culture? Culture is a funny thing—it takes a long time to build but can be lost almost overnight. For sure, there are successful consulting firms that are—or have been—public. BAH is not one of them. It tried this back in 1970; six years later, the partners bought it back.
Then there's June's other Booz news: Booz & Company and A.T. Kearney are kicking the tires on what a merger of would look like. Although far from a done deal, all indications are that it's still moving forward. A combined Booz/ATK would upset the Strategy apple cart a bit, but would the new firm be a game-changer? Steve Ellis, Managing Director of Bain & Company doesn't think it would, even though the new firm would undoubtedly take market share from Bain, BCG and McKinsey in the top-tier Strategy segment. (See story, Page 7.) But, as Ellis point out, mergers of equals are messy. And the two firms, both fresh off their own recent breakups, could have another significant period of housekeeping before either begin to see the power and full potential of their unity. Or not.
Joseph Kornik
Editor-in-Chief
Consulting magazine
Editor's Note: Since this article was first published, Booz & Company and A.T. Kearney issued a joint statement saying they had terminated discussion and would not be merging the two firms.
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