Deloitte hopes to resurrect Roland Berger deal

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Deloitte Touche Tohmatsu has not given up hope of one day forming an alliance with Roland Berger Strategy Consultants, even though the German firm’s partners voted overwhelmingly to reject a proposed deal on Saturday.

John Connolly, the accountancy network’s global chairman, 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.”

However, Roland Berger’s leadership is thought to have no appetite to reopen talks after the resounding “no” vote, which showed how concerns over independence and culture could inhibit consolidation in the management consulting industry.

On Friday night in Frankfurt, executives on both sides had finalised a proposal for an alliance hours ahead of a meeting of Roland Berger partners, whose approval would have been needed for any deal to go ahead.

The plan envisaged merging the German firm with part of Deloitte’s much-larger consulting arm to create a new business called Roland Berger Deloitte Strategy Consultants.

The merged entity would have had revenues of about $2.8bn-$3bn and a commitment for substantial extra investment, in keeping with Deloitte’s ambition of displacing McKinsey as the leading name in strategic consulting.

Martin Wittig, Roland Berger chief executive, would have remained chief executive.

However, to Deloitte’s apparent surprise, the proposed alliance was shot down at Saturday’s partner meeting following an intervention by Roland Berger himself.

Having founded the firm that bears his name in Munich in 1967, Mr Berger is no longer involved in an executive capacity but remains a significant shareholder and honorary chairman.

At the meeting of partners on Saturday, Mr Berger is understood to have promised to help fund an alternative strategy of independent growth with a personal investment of about €50m ($67m).

The partners then backed this plan overwhelmingly instead of the Deloitte proposal. One person close to their deliberations said the founder’s plea had had “an emotional impact”.

Mr Berger could not be reached for comment on Thursday. Roland Berger Strategy Consultants declined to comment.

Deloitte was the only Big Four accountant to hang on to its management consulting arm in the wake of the Enron scandal.

However, it is not the only member of the Big Four to be eyeing expansion in management consultancy right now.

Its hopes of resurrecting the Berger proposal are thought to hinge on what it sees as the strategic logic of an alliance.

Roland Berger is strong in Germany but is also well positioned in other territories such as France and China. Deloitte has a much stronger presence in the US and the UK.

The dalliance with Deloitte had also reflected a school of thought within Roland Berger that hankered after more global scale to meet the demands of international clients.

However, negotiations within partnerships can be more difficult to pull off than deals between publicly listed companies.

For example, merger talks between Booz and AT Kearney, two management consulting partnerships, fell apart earlier this year.

The fact that Deloitte went away empty-handed could also have reflected cultural differences between globe-trotting strategy consultancy and the less glamorous auditing that is still Deloitte’s biggest activity. In addition, partners in Roland Berger would have had to be comfortable with the risk of catastrophic liability that comes with this audit work – something that could be more worrying than a perceived loss of cachet.

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