Firm here strikes globalization gold
Bridge Strategy Group gains expansion capital with sale to India's Satyam
How about globalization in reverse? This week one of Asia's largest consulting firms is acquiring a prominent Chicago firm in the same specialty.
At a closing today, Satyam Computer Services Ltd. (NYSE: SAY) will finalize the acquisition of Bridge Strategy Group, a privately held management consulting firm based in the Loop. Satyam, based in Hyderabad, India, is a major Asian business and information technology services provider, with $2 billion in annual fee revenues growing at 40 percent per year and offices in 10 countries.
In an exclusive interview with the Sun Times this week, Bridge founder and CEO Steve Sheridan told me that the sale is for $35 million -- all cash -- and marks Satyam's first beachhead in America. He and five partners are the selling shareholders.
"This combination with us will now provide a platform for further expansion of services to the North American market," said Sheridan. "It will also spearhead a new kind of model for the management consulting field, which Satyam hopes to adopt and develop."
Is there any new twist to age-old classic management consulting?
"Yes," said Sheridan. "The reason we chose our name was because we set out in 1998 as seasoned partners in other top management consulting firms, to bridge the gap that existed between those who develop strategy for a company and those who help carry out the implementation. We had experience in both and elected to create a firm in which senior partners would be intimately involved in all phases of client project work, up to five days per week. Instead of a pyramid organization where partners supervised as many as eight client projects at all times, we structured ourselves to have each senior run only one or two maximum.
"Of our 40 professionals, most have over 20 years' experience, and the majority are seniors. And we vowed not to respond to RFPs for boilerplate projects. We tailor each project to specific circumstances."
Sheridan and his partners have built the firm over the last decade to current fee volume of $17 million and operating margins "in excess of 20 percent." It serves a select group of 20 corporate clients, half of whom are Fortune 500 companies. Six of the clients are Chicago- based.
By choosing only those clients where a Bridge partner has specific applied experience and expertise, the firm has been able to bring ideas and solutions of notable value to clients, he said. One example is a Chicago area client in the transportation industry that was planning an introduction of a new product in the form of a telematics solution to the monitoring of locations of major mobile operating equipment. After a study, Bridge persuaded the client to shift its target marketing to a different decision-maker than the one planned, and modify the message. The hypothesis turned out to be accurate, and the intro was a resounding success.
The merger should provide Bridge with much-needed expansion capital and its clients with market intelligence and consulting bases worldwide. Satyam serves 630 clients, 181 of whom are Fortune Global 500 companies. It has bases in Brazil, Hungary, Egypt, U.K., China, Malaysia, Canada, Singapore and Australia. With these and its large India staff, it will offer Bridge clients a chance to capitalize on lower consulting labor rates abroad and a wider array of specialized expertise.
Conversely, Bridge can offer a strong Chicago service base to existing U.S. clients of Satyam. One is Caterpillar in Peoria. (Worthy of note: Satyam's first U.S. client many years ago was Deere & Co. in Moline, for whom it pioneered one of the first outsourcing arrangements.)
But with recessionary conditions looming both in the United States and international markets, is this the best time to form a new marriage of service businesses?
Emphatically, Sheridan responded "yes." The 51-year-old Chicago native, DePaul MBA and McKinsey & Co. consulting veteran said that tough times for business bring exceptional opportunities to management consultants.
"Let's face it: recessions bring problems, problems need solutions, and we earn a living generating solutions," he said.
