PwC executives say the firm's latest acquisition already is paying dividends
PwC completed its announced acquisition of Diamond Management Consultants for about $378 million on Nov. 2. The deal brings more than 500 Diamond consultants into the firm as PwC's Diamond Advisory Services. It also brings a lucrative and ready-made client base, particularly in the healthcare and financial services sector. Diamond Chief Executive Adam Gutstein will become a member of PwC's Advisory Leadership Group and will lead the newly created PwC's Diamond Advisory Services. Consulting sat down with Dana McIlwain, U.S. Advisory leader for PwC, and Joe Duffy, PwC's U.S. Advisory strategy leader, to discuss the deal.
Consulting: Now that the deal is closed, where are you in the transition process?
Duffy: We just closed the deal and this was our first full week working together as a combined team. We brought Diamond onboard intact into the firm as PwC's Diamond Advisory Services—maintaining their business as a part of our Advisory line of service—and they are also simultaneously working with our existing relationship teams in financial services, healthcare, and products and services to take advantage of the synergies across those teams and to leverage the combined talent and leadership from both sides. So far it has been very successful. In fact, we're actively pursuing several large opportunities and the combination of our skills is useful in those pursuits.
Consulting: Do you envision the Diamond brand going away at some point?
Duffy: We saw tremendous value in the Diamond brand; it's very strong and Diamond has a very good reputation, particularly in the markets they serve, financial services and healthcare in particular, not only the kind of work they did, but the quality of the work and the brand. So, we thought it was important to preserve that brand and leverage it under the name PwC's Diamond Advisory Services. The goal is to transfer that brand equity to PwC. Diamond has a very high quality but does 90 percent of their business in the U.S. They'll benefit from PwC's global reach, and our ability to service—for example—financial services markets in Tokyo, Frankfort, Singapore and Hong Kong. We would expect that brand equity transfer to take two years or less.
McIlwain: We believe Diamond has a strong brand, a great name in the market and a terrific client base. We want to make sure that we leverage that brand in providing value to our clients and our firm.
Consulting: What attracted you to Diamond?
Duffy: Strategically, as we looked at the marketplace, we were particularly attracted by the skills they had around innovation, growth and customer experience. We're very bullish on the opportunities ahead of us, and certainly we expect to see growth in financial service and healthcare from Diamond, but we think our platform, brand and access can also take them into markets where they're not well known.
Consulting: How about culturally? It's often difficult for a smaller firm to be acquired by a much larger firm. Why are you confident this will work?
McIlwain: The cultural fit was a huge element to our diligence about this deal. We see a tremendous cultural fit between PwC and Diamond. Both organizations are client centric, relationship centric, people centric and very much focused around creating a very attractive place to develop individuals' careers.
Duffy: The shared sense of partnership was also something that was culturally attractive. They were a C-Corp, but they very much looked and felt like a partnership. Internally, they called themselves partners. And we acquired an outstanding leadership team. Adam [Gutstein] and his team have a strong track record of running a quality business that they've built. So, that's an advantage, as well.
Consulting: How's the integration going at this point?
Duffy: Within the regulatory constraints, we were able to do some minimal planning and prepare for Day 1. So, when the deal closed, we were in a position to take advantage of the joint opportunities available to us. As I mentioned earlier, we are currently pursuing large opportunities where the combination and capabilities are very attractive to the clients.
Consulting: How about the back-office integration?
Duffy: Two words: We're done. It's fully transitioned. We got really good at this with BearingPoint, which was larger and more complex given the bankruptcy issues and we had
just ten days to do it. Here, we had more time to plan, and we were transitioned on Day 1.
Consulting: You mentioned BearingPoint and now you've acquired Diamond, is M&A going to be a significant part of PwC's playbook?
McIlwain: We've been very fortunate to grow both organically as well as inorganically the last few years. Whether it's organic or inorganic growth, it's really about making sure that we're focused on the client's business issues and having the relevant skills and industry credentials to solve our clients' business problems, as well as provide our people with career-development opportunities. We'll continue to look at acquisition opportunities on a selective basis where it makes sense.
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