| | By Mick James
Most consultants hope
to celebrate Christmas
with a nice bonus. For
senior staff at A.T.
Kearney, though, things
were rather different
this year. As the firm
completed its buy-out
from EDS, they were
asked to dig into their
pockets and invest in
the firm to finance the
deal.
That most did has
clearly come as a
surprise to many in the
industry:
“I’ve been called by
so many headhunters,”
says Mark Page, an A.T.
Kearney director, based
in London. “In fact I
can’t think of any that
haven’t, and all with
the same cynical ploy.
You can stay there and
pay, or come to us and
get a sign-on bonus.”
Despite these
inducements, 90% of
those who were invited
to invest have done so:
“For some people it
pushed their decision to
retire or to do
something else,” says
Page. “We’ve had one or
two special cases which
we’re working through—we
didn’t always know where
people stood
financially, and we’ve
made arrangements for
people to borrow money.”
Investment has
proceeded at two levels:
“partners” have acquired
voting stock, while | |
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| | “principals” have also
been able to invest in
non-voting equity which
will become the
foundation of their
equity when they become
partners. In future
everyone who becomes a
partner will be asked to
invest, but this will be
a tapered process,
starting from a mixture
of investment and awards
of equity while working
at principal level. An
11-strong elected global
board of directors will
oversee the new firm.
For Kearney the deal
represents a clearing of
the decks which will
allow the firm to focus
wholeheartedly on its
new life as an
independent consultancy.
The “new” firm consists
of all of the former EDS
subsidiary, minus its
headhunting arm, which
is being hived off
separately, and a North
American business
focusing on maintenance
and repair operation,
which will remain with
EDS.
“We still go out to
the same clients each
day,” says Page. “But
there’s a wave of
excitement, as well as
symbolic things like the
fact that we’re all now
known as partners even
if we’re not known as
that legally.”
Page believes the
deal now frees the firm
to invest more in growth | |
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| | and adopt a more
entrepreneurial
culture—as well as stop
talking about its
relationship with EDS.
“There was one CEO
where we always had to
spend 10 minutes out of
every precious half-hour
appointment talking
about our MBO,” he says.
“He was fascinated by
it.”
One area where
A.T.Kearney will be
making very visible
headway post-deal is in
recruitment: “It wasn’t
easy to recruit last
year, particularly at
senior levels,” says
Page. “Even people who
were excited about the
buyout preferred to wait
and see.”
Now it’s full steam
ahead: “Pretty nearly
all of our offices have
quite aggressive growth
plans plus a bit of
catch up. Last year it
was difficult to plan so
we’ll all have to work
hard to recruit people.”
Page believes that
the buyout can only
strengthen Kearney as a
recruitment brand:
“We’ve always done very
well out of recruitment
from industry—we tend to
have very high
acceptance in client
organisations because we
bring in more
experienced teams who
get stuck in,” he says.
“In business schools the
noise about the MBO has | |
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| | cut both ways. Some have
been interested and some
have been looking for
safer bets elsewhere.”
The firm has also
received approaches from
former staff: “We do
have a number of people
who left us in the last
few years at a senior
level asking to come
back,” says Page. “We
stay on very good terms
with our alumni - it’s a
natural process to go
through.”
The firm has also
worked to ensure that
its relationship with
EDS survives the
buy-out: “Our colleagues
in EDS are thrilled that
we’ve done the deal,”
says Page. “We still
identify strongly with
EDS.”
As well as continuing
to work in (now
non-exclusive
partnership) with EDS in
joint clients, EDS
remains a major Kearney
client. The companies
will also work together
to develop new
intellectual capital in
areas of common
interest.
At the client level,
Page believes that the
brand is
well-established in the
minds of both current
and former clients, but
the push is now on to
explain to the rest of
the market exactly what
AT Kearney is and what
it stands for.
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“We know what we want
to do,” says Page. “Our
biggest priority is to
identify where we have
pockets of strength and
to make sure we’re
piling our resources
into those markets. We
want to be working in
areas of more generic
performance improvement,
more than just
operations.”
Page clearly believes
that the market is ready
for what he describes as
“really serious stuff”
aimed at the CEO and CxO
level.
“The market is very
strong for that sort of
work,” he says. “What
it’s not is blue sky
strategy—that has become
a niche—clients don’t do
the “where is our
industry going” stuff
anymore.”
Will the new
incarnation of Kearney
succeed? The emergence
of an independent global
consultancy firm which
stands aside from
implementation and
outsourcing work will
perhaps set the tone for
the direction of the
whole industry for 2006.
For the moment both
clients and candidates
have an interesting new
option to consider.
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