Category: Strategy

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Chaucer Group acquires Medley Business Solutions

The acquisition of Medley Business Solutions by Chaucer Group was announced in mid-December – I was delighted to play a significant part in this transaction.

Chaucer has grown strongly over recent years and is now well established as a leading consultancy in people centric digital transformation in the UK and USA. Joining with PE-backed Bip Consulting in mid-2020 has given Chaucer the ability to expand faster through partnering with other BIP companies and investment in both organic and inorganic growth activities.

Founded in 1997, Medley has built an enviable reputation as a client-side IT and management consulting firm operating in UK Public Sector. Its experienced practitioners are at the heart of a number of highly successful IT transformation programmes in central government, criminal justice, government agencies and NDPBs.

Medley was looking for access to a wider skillset to enable it to provide additional value to its client base. Chaucer wanted to grow its existing Public Sector expertise by adding more senior IT capability and through acquisition of a team with an existing set of executive-level relationships and a solid book of business that it could merge in with its own.

The two firms already had some experience of each other through partnering activity on bids and client assignments – some additional focus was placed on this to prove that joining together would be beneficial to both firms. The business fit continued to look good and the cultural fit was very positive. Things took off and a deal was discussed, agreed and completed in great spirit and with a joint outlook on what the parties wanted to achieve individually and together in the coming years. Client feedback has been extremely positive and the combined team is looking forward to achieving even greater outcomes for all.

See here for Chaucer’s press release.

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Update your consulting propositions now!

Consulting firms and their clients have now broadly adapted to the remote working world. Projects have been prioritised – some put on ice at one end, new urgent projects added at the other and a mix in-between.

Client thoughts are turning to the future, now that it’s clear that we won’t be “coming out of this” any time soon. When we do emerge, we’ll be doing it into a new world…but what will it look like?

Strategy consulting firms have seen backlog and pipeline drops by around one third over the past couple of months. This shouldn’t have come as a surprise – who has wanted to strategise over the past few weeks? I believe that these firms are about to come into a new wave of activity, however, scenario planning for their clients, working out what they’ll need to do to adapt to the new world. They’re getting ready for this and the volume of post-COVID-19 “insights” on the major strategy consulting firms’ websites has been steadily increasing over the past week or so – much of this is at an overall “preparing for the new normal” level but some is quite focused on individual sectors or the potential use of specific solutions such as AI. Interesting reading!

Every sector will have its own scenarios to consider – to mention just a few examples, will Utilities think about onshoring their call centres, how can airports utilise contact-free technologies to transform customer journeys whilst maintaining high levels of security, which manufacturing supply chains still operate effectively and which need to go back to the drawing board, will retail banks take the opportunity to radically downsize their branch networks, how much can the health sector provide via home-based care with the support of virtual patient engagement technologies? There will be a huge amount to do and a lot of advice and support to be provided by the consulting and IT industries in particular.

Don’t relax at this point, however. It’s not the case that all firms will benefit equally. You need to prepare, and do it now!

I was reviewing a consulting firm’s Financial Services Digital proposition recently. It was fine…good, even…but I realised that it was deficient in that it looked at the world through a “pre-COVID” lens. Financial Services has, to date, viewed Digital as primarily another channel.  Now that, for example, the over 60’s are using PCs and tablets for video calls and are having to use the internet for shopping, banking etc, there’s an argument that the “cork is out of the bottle”. Digital Transformation is about to hit Financial Services organisations like a tsunami! Digital will be expected by the majority of the retail and business customer bases and there will be a permanent switch in traffic volumes between channels. The impact on operating models, staff skillsets, data accessibility and the like is significant.

Taking this on board (admittedly just a scenario!), the consulting firm’s Financial Services Digital proposition suddenly needs a rethink – it should be more “all-encompassing”, at least in terms of providing the framework, and then the client can understand the scope of the overall transformation required and the elements that this consulting firm can help to address.

The same holds true for many consulting propositions – they need to be reviewed and then updated to take the new world into account. Oh, and just to add an additional flavour, I suggest there are two new world time horizons to think about – “medium term” whilst social distancing remains essential (probably until there’s a vaccine that many of us have been able to benefit from) and “longer term” when we’re properly in the new world.

Enjoy the rethink and stay safe.

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Virtrium joins Chaucer Group

The merger of Virtrium into Chaucer Consulting was announced recently – an important milestone for both firms.

My story here begins in the summer of 2016 when the Directors of CIO Advisory firm Virtrium asked me to assist them with their forward growth strategy. Virtrium had a good brand in the market and a wealth of satisfied, long-term clients so I was happy to take a look. We spent time understanding why clients came to Virtrium and what they were asking Virtrium to help with, and gained a wealth of information.

From this, we honed propositions into three groupings that follow the life cycle of CIOs’ key investment programmes, namely IT Strategy, IT Architecture and IT Transformation – and with these being focused in on the Digital or Omni-Channel agenda that many IT functions are needing to supplement their own teams with external expert assistance. Altering Marketing messages and sales collateral to suit, the team was able to explain better the core focus of Virtrium and how it could assist its clients.

The results have been rewarding – a similar level of “point solution” assignments but, crucially, a much larger demand for Virtrium to assist its clients across complete programmes, taking lead roles in implementation phases.

Moving the clock forward two years to last summer, the Virtrium Board felt that it would be able to support its clients more easily if it had access to a larger team of programme and change management resource, and recruiting these was both taking an inordinate amount of effort and taking too long. Accordingly, we went out into the market to talk to other consulting firms that come from a programme, project and change management background.

In Chaucer, not only did we find the necessary capability but also a wealth of business consulting skills to sit alongside Virtrium’s IT strength. Also, Chaucer was already heavily involved in the implementation of Digital Transformation programmes without necessarily having been involved in the earlier strategic definition activity – Virtrium therefore provides the Chaucer team with additional much needed expertise in IT Strategy and Architecture. A true “win win” or “2 + 2 = 5+” scenario.

It’s only been a month, and with the Christmas break within this too, but client feedback has been excellent and supportive with some programmes involving one “heritage firm” or the other being extended to include the expanded capability.

I’m delighted to have been involved across the journey so far and look forward to witnessing the next chapter – the continued growth that the combined business will undoubtedly enjoy going forward.

See here for Virtrium’s press release.

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What acquirers look for in a Consulting Firm

I was interviewed recently, as part of a podcast series, on the topic of what acquirers look for when searching for consulting firms to acquire.

Drawing on my experience from both sides, helping firms to acquire and “packaging up” firms to get them ready for acquisition, there was more than enough content to fill a 25 minute session.

Enjoy listening to the podcast here and feel free to provide comment or contact me to debate the content and/or share your own experiences.

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Overseas acquirers are on the lookout!

 

 

 

At the time of writing, I’m looking at a foreign exchange website and seeing that £1 will buy around €1.18 or US$1.25, making our overseas summer holidays more expensive this year. Maybe stay at home and mix with the larger volume of inbound tourists?

Overseas businesses are seeing things more like US$1 will buy 80p or €1 will buy 84.7p, which is much more sterling than they’re used to – so, now that it’s clearer to them that the UK won’t cease to exist after Brexit and is even likely to prosper, they’re seeing the UK as a good investment prospect, as evidenced by recent announcements from Qatar, Nissan and Lidl.

The UK has always been a stepping stone for US businesses wanting to expand into Europe and vice versa. Outside of this, the English speaking world likes to set up a base in the UK and even list on the UK Stock Exchange, which has tended to provide a stable foundation to build upon. The weakness of the pound, which isn’t likely to change much any time soon, is contributing to an increased volume of such activity.

In our Professional Services and IT Services world, we’re seeing a similar picture and there is a number of UK-focused acquisition programmes led by overseas headquartered firms that I’m aware of. This activity in the market is pushing valuation multiples up a little but it doesn’t matter too much for the acquirer as the exchange rate is more than making up for this.

Does this mean that the time to package up your firm and sell it is now? Well, it depends. Initial search activity from overseas buyers may not necessarily be as well focused as it could be – “let’s go and research what’s available in the UK and see if there are some reasonably decent firms that we can pick up for an OK price!” – so you may get some initial inbound enquiries and/or interest if you hang up a “for sale” sign. It doesn’t take long beyond a first meeting, however, for an acquirer to focus in on the fundamentals of a firm, including:

– quality of work

– breadth and depth of capabilities

– a client base to leverage

– a decent revenue, gross margin and EBITDA profile

– a baseload of forward business.

I’m amused to see how some firms have been “respraying” themselves to look “hot” – e.g. process improvement consulting firms now displaying a Business Transformation message, IT advisory and project management firms jumping on the Digital bandwagon and some even trying to “double up” on Digital Transformation! If it’s a genuine change in direction for these firms, they’ve invested in the new positioning and have evidence (case studies, industry awards, a decent number of trained consultants etc) to back this up (Note: it’s normally a three or so year programme to change direction properly) then fine. A swift respray, however, is unlikely to work since these overseas acquirers aren’t desperate to buy – they’re taking a look and may buy if the search exercise uncovers something genuinely interesting. In my own activities on the acquirer side, it isn’t difficult to distinguish between the ends of the spectrum and “pure respray” firms are unlikely even to know that we’ve taken a brief look!

So the overseas acquirers are here for a reason, they’re investing but they’re not being silly!

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What’s the point?

 

When I take on a new client – small, medium-sized or large – our engagement often starts with me asking something along the lines of “What’s the point?” or “What’s the purpose of this business?”. Answers range from people giving me their Vision statement through listing out the key business objectives and financial targets for the Financial Year to explanations of the range of services that they provide to their clients. These are all answers looking in the business rather than on the business.

Unless the leadership team of any business is aligned with regard to overall objectives that the owners have for that business, the focus of the individual leaders will be in different places. Many businesses have to sort out this alignment from the outset, and regularly thereafter, as they have significant funding requirements. Given that most services businesses have a low cost of entry, however, this is not necessarily the case and I meet many firms that were established a number of years ago by a small group of Owner Directors with a desire to service clients better than their previous employer, be their own boss or simply do it for themselves rather than make someone else rich. For a while this is fine since establishing an initial set of service propositions and gaining a first few clients can be done in the absence of a shareholder strategy. Eventually, however, the firm may fall into doing things that aren’t core (e.g. because a client offers a different piece of business to its trusted advisor), investment may be put into the wrong places and the firm may stagnate.

I also spend time with groups of Partners at larger firms, many of whom were not in at the outset of course, and find an interesting mix of people headhunted in for their key client relationships, recruited to establish a new capability for the firm, promoted up through the ranks etc. Their own reasons for being there are personal to them and rarely shared with their fellow Partners. Similar problems can occur regarding direction, where to invest and what to steer away from – a number of Partners then end up spinning the wheels for a few years just to gain enough profit share to fill their bank accounts to a level sufficient to make them financially secure.

There are essentially three pure types of professional services firm – asset growth, income generation and lifestyle. Most firms contain a blend of objectives that cross all three but the proportions vary dramatically from one firm to another. There is no “right answer” but there is a right answer for a particular firm at a particular point in time.

I enjoy taking Owner Directors and Equity Partner teams in my clients through an exercise to identify what the mix of the three is currently and what they believe it should be. Many Executives find that, in order to come up with the answer to the simple question, they need to get into deep and meaningful conversations at home about life aims – something that may not have been looked at since the early days of relationships! Once we have individual desires understood and shared, we then work out an overall answer that each of the owners can subscribe to. From this point, every business decision is made in a context that is understood by the leadership team and is often easier and quicker to make than previously.

Once people get what “the point” is, their business (and often personal) life becomes clearer and more fulfilling!

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