Supply Chain consulting firm BrainNet acquired by KPMG

Editor's late note - MUCH more about this here on our sister site, Spend Matters US! 

It may not quite rank with SAP / Ariba, but there was another significant acquisition last week in thew world of procurement and supply chain solution providers.

This time it was focused on the consulting world, where KPMG AG ( the German arm of the global consulting and audit giant) acquired BrainNet Supply Management Group, which specializes in procurement consulting and supply chain management.

BrainNet was founded in 1995 and has grown to around 300 consultants, with revenues of over $65 million. That spans not just core procurement and supply chain activities but also logistics, operations, manufacturing and research areas. They are strongest in Germany, Switzerland and related areas, but have offices in  15 countries including the UK and Pittsburgh in the US – their “more than 500 clients include over 100 of the global fortune 500 companies”.

Here’s how the press release describes the future:

“With the transaction, KPMG will create a global Center of Excellence to provide support for the procurement and supply chain management offering of its member firms, including the BrainNet business. The Center will be led by Christian Rast, currently CEO of BrainNet.  Christian Rast added, “We are delighted to be joining a network with KPMG’s capabilities and global scope. The combination of our strengths in SCM and procurement creates a market-leading offering to meet the needs of global clients. We feel confident that the combination of our strategic and technical expertise along with KPMG’s international footprint will greatly enhance our efficiency, innovation and competitive advantage.”

We wish them luck – the track record of small / mid-sized consulting firms being swallowed up by bigger ones isn’t great in my experience. Consultants often consciously choose NOT to work with the biggest firms for particular reasons; BrainNet staff have woken up today to find they’re part of one of the largest firms in the world (145,000 staff). It’s an excellent firm of course – but not everyone wants to work for a giant.  Other niche supply chain consulting firms will be sniffing around BrainNet’s people I’m sure.

That’s one reason we don’t see that many acquisitions of smaller consulting firms by the larger (compared to the software market for instance) – the assets which form a large part of what you’re buying can walk out of the door. It’s more usual for a large firm to target a sector and go after it with aggressive recruiting and sales effort.

In terms of clients, we’ll have to wait and see what the impact is. I don’t know enough about BrainNet’s pricing strategy to predict whether clients will see fee increases. BrainNet have a strong reputation, so I wouldn’t have thought there were significant price differentials there – but clients obviously need to watch out for that.

In terms of competitors to KPMG (Deloittes, E &Y, PWC, A T Kearney etc), the addition of 300 consultants makes KPMG’s presence in this area even stronger – if they can hold onto them of course. Might they respond with acquisitions of their own?  It’s not just the procurement software market that might get interesting over the near future.

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