The Willy Wonka world of PA Consulting

From creating 3D printed chocolates and specs to working for the MoD, PA is not your ordinary consultancy business. But now it has been snapped up by private equity firm Carlyle, can the magic be maintained?

by Matthew Gwyther
Credit: Warner Bros/The Kobal Collection
Credit: Warner Bros/The Kobal Collection

Alex Stirling (below) was turned down for a job by PA Consulting Group when he left Cambridge. He didn’t exactly bear a grudge and has gone on to do very well for himself. But now, as a big (and doubtless extremely wealthy) cheese in the European buyout team of private equity behemoth The Carlyle Group, he has had some sweet revenge. He’s bought the company. Or at least 51% of it.

Carlyle’s purchase last year raised a few eyebrows. It valued PA, which had been owned by its 2,500 employees, at around $1bn. This is hardly an Uber-like multiple when PA generated revenue of £423m in 2014. But management consultancies are tricky to price and aren’t traded that often. Deals where smart, often highly-strung and demanding individuals are the sole asset have a habit of unravelling. Egos can lead to culture clash. The talent can walk. How many Golden Tickets would have bought you a Willy Wonka?

But Stirling is convinced he has bagged a goodie. ‘We believe PA is at an inflection point. We have invested in the sector before and looked at a number of consulting firms because we believe the sector has strong tail winds caused by regulatory and technological change. But PA is uniquely differentiated because it can offer strategy and operational consulting using more experienced people, and then place a technology/innovation overlay. A private equity incentive mechanism can help drive growth and performance further.’ The latter reason is a not unimportant carrot that could easily turn into a stick. PE brings very clearly visible targets for PA.

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