Deloitte to undergo major restructuring 🛠️

Grant Thornton raises major external capital | McKinsey suicide sheds light on WLB

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Mar 25, 2024

👀 What to expect: ~900 words / ~5 min read

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Exec Sum

Deloitte undertakes major restructuring
Professional services shift away from the partnership model
Grant Thornton raises major external capital

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Industry News

The Headlines 📈

Deloitte launches largest restructuring in a decade

Led by global CEO Joe Ucuzoglu, Deloitte is embarking on its largest restructuring in a decade which aims to simplify the firm’s structure, streamline operations, and cut costs in anticipation of a market slowdown. The reorganisation will consolidate its business units from 5 to 4: 1. Audit and Assurance. 2. Strategy, Risk and Transactions. 3. Technology and Transformation. 4. Tax and Legal. The changes are expected to take one year to complete, leading to the most significant effects at the partner level, focusing more on client engagement over internal management. The restructuring comes as Deloitte and its peers brace economic challenges that are affecting client spending. Read more

Professional services shift away from the partnership model

Firms are exploring alternative structures and ownership models to adapt to changing market demands and technological advancements. Notably, PE investments are becoming increasingly prevalent, with firms like Baker Tilly and Moore Kingston Smith partnering with PE to fuel growth and innovation. This trend is driven by PE's substantial dry powder and the attractive, steady earnings of accountancy firms. Firms will need to grow fast to satisfy the expectations of investors and staff however, with retention and regulatory frictions continual concerns for these businesses. In 2022, the SEC warned accounting firms to exercise great caution around investments from PE. Read more.

The News 📰

Grant Thornton (GT) raises external capital - GT and New Mountain Capital (AUM $50bn) announce a strategic growth investment to enhance GT’s business strategy, leveraging momentum from record fiscal year revenues. The partnership will boost the firm's scale, resources, and agility, allowing for further investments in talent and technology. The transaction is expected to close in Q2. Read more.

Tragic end for a promising Consultant - Saurabh Kumar Ladhha, a 25-year-old consultant at McKinsey's Mumbai office, died by suicide due to work pressure on February 23, 2024. An IIT Madras and IIM Calcutta alumnus, Laddha's remarkable career included stints at Cipla and Piramal Pharma. Our sincere condolences go out to his family and friends. Read more.

Top AI consultancies ranked - With many businesses seeking advice on how to harness AI to improve internal operations and support profitable growth, TechRound put together a ranking of the top 10 AI Consulting Companies, with Addepto topping the list, followed by McKinsey’s QunatumBlack and Deeper Insight. The most prevalent services offered include custom GPT integrations and AI capability assessments. Read more.

PwC evaluates sale of Indigenous Consulting - PwC is seeking buyers for its 49% stake in PWC’s Indigenous Consulting, a firm focusing on First Nations community projects, with over +50% of its consultants of Indigenous background. Expression of interest documents have been sent out to PE firms, Indigenous groups, and competitors, following scrutiny over PIC's $10 million worth of government contracts post-PwC tax scandal. Read more.

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McKinsey - Spark and Spark & Sustain: How all of the world’s school systems can improve learning at scale

In the decade preceding COVID-19, student achievement stagnated in school systems globally. The pandemic itself exacerbated this trend, wiping out decades of educational improvements. McKinsey asks what can be done to fix this?

KTAs

Standardised achievement scores are correlated with annual public expenditure per student, although performance varies greatly for given spend levels
Every educational system assessed showed a gap in student performance that correlated with socioeconomic status
If all school systems improved at the rate of top improvers, nearly 350m children could emerge from learning poverty* by 2050
Only 20% of school systems achieved their transformation objectives, with the top reasons for failure being (1) conflicting priorities, (2) inadequate or inequitable funding, and (3) educator talent shortages
But those using select 7 ‘how’ levers were 6x more likely to be successful: