Could latest merger be sign of things to come?December 2008
Two prominent corporate responsibility consultancies – Csrnetwork and Sd3 – are to merge on 1 January amid suggestions that a period of consolidation in the consultancy market could be on the way.
The UK-based outfits, which have a combined annual turnover of £2million ($3m), were both founded in 1999 and count a number of large multinational businesses among their clients, including ArcelorMittal, Bacardi, Balfour Beatty, General Motors, InterContinental Hotels, Procter
& Gamble and Samsung.
The deal is the second significant merger of corporate responsibility consultancies this year, after the Corporate Citizenship Company and the Smart Company joined together in early 2008 to form Corporate Citizenship (EP9, issue 9, p2).
The UK-based consultancy CSR Global was also recently taken over by the sustainability advisory company hurleypalmerflatt, which has offices in Britain, the Irish Republic and India. As a result, CSR Global founder Chris Moon has been appointed divisional director at hurleypalmerflatt’s energy and sustainability wing, based in London.
One senior figure at a leading British CSR consultancy told EP the csrnetwork/Sd3 merger could be the shape of things to come. ‘Everyone’s been saying that there’s going to be consolidation in this area,’ he said. ‘We’ve done our own analysis of the market over the past year and our conclusion is that there’s no real long-term future for a lot of the smaller consultancies. They make enough money to get by, but are not growing in any perceptible degree either in terms of fee income or actual size, although one or two, including ourselves, are bucking the trend.
‘It’s quite surprising that the big four firms have not yet made a move to buy up some of the smaller consultancies. The financial crisis doesn’t appear to have made things worse at present, but maybe it will hasten any trend towards consolidation.’
The newly merged Csrnetwork/Sd3 organization, yet to be officially named, will have at its disposal 20 core consultants and a pool of about 100 associates who can be called in on jobs as and when required.
It will operate from two UK offices – in Bath and London – as well as San Francisco in the US and Seoul in South Korea.
The founders of each consultancy – Mark Line and Jon Woodhead at Csrnetwork and Dave Knight and Jason Perks at Sd3 – will continue to work for the new company.
Knight told EP the deal would not involve any money changing hands. ‘It’s a straight merger,’ he said. ‘We both believe it’s a really good link-up that will allow us to combine each company’s strengths and to offer a wider reach around the world.’
Knight added that one benefit of the merger would be to make the new organization the biggest provider of AA1000AS assurance, with 67 engagements in the field.
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