Price Waterhouse Cooper

Relevant Future Direction

• The last PwC acquisition recorded with the SEC was in 2010 when the company acquired another consulting firm. A search of a database of mergers and acquisitions found no IT acquisitions in the last 10 years.

• However, PwC has an annual report for 2019 with a section called investing in technology and people. In this document, PwC states that it is on a digital transformation journey driven by "key investments in technology and a focus on upskilling our people." They are planning to prepare their staff of 276,000 around the world for the digital world of tomorrow.
• The three elements of PwC's approach include Business-led innovation, Client-led innovation, and Supporting programs.
• PwC is planning on investing approximately "USD$1 billion in solutions and supporting programmes to create a connected ecosystem and drive innovation and quality" as well as another USD $2 billion globally.
• An analysis of the above information indicates that PwC may be open to purchasing new software or acquiring a company with IP for a solution that will provide value-add to their staff and clients.
• A recent article concerning new technologies at PwC identified Suneet Dua as the U.S. chief product officer at PwC. He can be reached at suneet.dua@us.pwc.com.

Current HR Software

• A review of PwC's advertised products shows that Saratoga is the only tool targeted to HR and employees.
• PwC's flagship HR tool used with clients is called Saratoga. The website states that they provide "40+ years of history and measurement from over 2,000 clients globally." The system purports to work directly with raw data from the client's HRIS to automatically calculate results for metrics and provide effective insights.
• Saratoga can provide information on the client's "workforce productivity, span of control, succession, recruiting costs, hire quality, labor costs, turnover, diversity, HR cost, and org structures." There is no mention of employee engagement.

McKinsey

Acquisitions

• In the last seven years, McKinsey has acquired the following six software companies:
•  Orpheus, acquired in February 2020, is a German company that provides innovative BI applications for Procurement Performance Management.
•  Veryday, acquired in November 2016, is a Swedish company that is one of the world's top-ranking design and innovation consultancies.
•  QuantumBlack was acquired in December 2015, provides advanced data analytics services for critical decisions.
• Acquired in May 2015, Lunar is a product design and development consultancy services provider in the medical field.
•  Lixto is an Austrian company acquired in August 2013 that provides a solution that searches and aggregates market research information in real-time

Current HR Software

•  People Analytics: Using machine learning, People Analytics provides insights to allocate talent, define organizational drivers of performance, and boost workforce motivation while minimizing attrition.
• Skills Finder: Using AI, Skills Finder creates an inventory of employee skills to "inform talent decisions, enable internal mobility, and discover the untapped potential within the organization. "
• Strategic Workforce Planning: Strategic Workforce Planning enables translates business drivers into organization requirements for skills, reviews expected supply both within the organization and in the labor market. It identifies gaps or overages and suggests "how to solve them through reskilling, hiring, and redeployment. "
• Talent and Org Intelligence: An advanced analytics tool delivers an "assessment of how a company’s workforce stacks up versus competitors. "
• Talent Match: Talent Match suggests "top talent to critical roles, assemble agile teams, and implement strategic succession planning."
• Only the People Analytics solution mentions boosting workforce motivation. 

Boston Consulting Group

Acquisitions

• In the last five years, BCG has acquired two software companies:
• In October 2019, BCG acquired AllofUs, "one of the UK’s most established digital experience design and innovation consultancy firms."
• In July 2017, BCG acquired Maya Design, a technology design firm, and innovation lab based in Pittsburgh, Pennsylvania.

Current HR Software

• The only tool mention on the BCG website is called ORGBUILDER. It has diagnostic capabilities that give "clients a detailed view of how their organization is distributed by layer and pay level."

Market Size for Similar Software Acquisitions

• The attached spreadsheet provides software acquisition data for consulting and HR services from September 2019 to September 2020. The columns include Acquiree Name, Acquirer Name, Date, Price, and Acquisition Terms (Stock or Cash).
• While there are 324 transactions in the database, only 30 of them published the price and terms.
• The prices for acquisition range from $30B to $300,000.
• When averaged, the results are:
• Average for all 30 published prices is USD$1,755,285,372.
• Average for those less than $1B is USD$90,141,667. 
• Average for those less than 10M is USD$3,505,556.

Acquisitions by consulting companies

• An article on a consulting company website discusses how consulting firms fuel growth through acquisitions of either smaller consultancies or software solutions. It outlines three types of acquisitions :
• Data and analytics
• Design and digital
• Boutique consultancies
• While acquisition processes vary widely in different firms, there are two major principles that can help determine where to start the dialogue in a given organization. Does IT drive software acquisitions, or does the business drive IT?
• In the first scenario, the business leaders leave it to the IT department to find new solutions and bring them forward to the business leaders for review. In the second scenario, business leaders decide they need new technology and drive the selection process, while including the CIO and the IT department in the decision-making.
• If the culture is such that the decisions are left to the CIO, that means the business leaders have faith in the CIO to understand their business needs and bring appropriate new technologies and solutions to their attention. If that is the culture of the company, the CIO is likely the first step to getting the organization to consider a new solution.
• While that used to be the norm, as business users became more tech savvy, they began to drive the conversations. If that is the case in the consulting organization being approached then the partner responsible for the HR practice would be a good starting point for entry into the organization.
• When solution acquisition is key to the company's strategic plan, as is the case for PwC, the Chief Product Officer is acting as a bridge between IT and the business and is likely the best place to start.

IP Valuation

• Although not specifically requested, the analyst team is providing a link to this February 2020 article as it may provide insight into the valuation of companies with IP.
• The Business Valuation Resources company (BVR) provides authoritative deal and market data, news and research, training, and expert opinion when valuing a business.