The first thing to say is that PE firms are far more active in consulting now than they were in 2017. Big, high-profile deals triggered an industry-wide awareness of, if not exactly consulting, then certainly the wider business and professional services world. But the wave of smaller scale deals we’ve seen since then, involving a growing number of PE firms, aren’t simply based on me-too strategies. The dividing line between products and services is becoming increasingly blurred, so it makes sense for a PE firm, looking for a balanced portfolio, to look at firms that do, as well as those that make. Consulting firms have also changed: There’s far greater awareness of the need to generate predictable revenues via software and data assets, and managed services. And in addition, many consulting firms continue to generate high margins, despite the crisis, making them a much more interesting option to investors.

Increasingly, we see PE firms, or PE-owned consulting firms, adding to their range of capabilities through additional deals, much as we predicted. Last year’s acquisition of Chaucer by Apax-backed BIP is a case in point, not just strengthening BIP’s position in the UK market but complementing its technology and analytics expertise with operating model design skills. This much more targeted activity is likely to continue. Our research suggests that one of the most important legacies of the pandemic in business will be the desire for faster and more imaginative transformation programmes. Having slipped down clients’ wish lists in the middle of last year, at the height of the crisis, the ability to innovate is again the most important factor they think about when deciding which firms to work with. Imagination and innovation depend on a multidisciplinary approach, so being able to combine different firms with different capabilities will be critical to success.

However, I find myself wondering whether PE firms have seized the idea, but not grasped the challenges of execution. Buying several firms doesn’t guarantee you an integrated solution. Indeed, if you look at some of the most successful firms, at least in terms of generating returns for shareholders, they’ve allowed acquisitions with distinct capabilities and strong brands to operate independently. Fjord was bought by Accenture in 2013 and still has a distinct presence in the market, the same is true of Fahrenheit 212, bought by Capgemini three years later. It’s no coincidence that both examples involve design agencies—and this goes to the heart of the problem. When a behemoth buys a boutique for its specialist skills, it often ends up Borg-like, absorbing and obliterating the latter. The only way to avoid this is to maintain some brand and operational distance—which makes it harder to create genuinely integrated solutions for clients. PE firms have the advantage of not being corporate monsters; the downside is that they’ve little experience of integration. They have the capacity to re-shape the consulting industry, but they haven’t done so yet.