Mercer, a consulting division of New York-listed Marsh & McLennan, has bought specialist risk management and financial service practice consultants Oliver Wyman & Company for an undisclosed sum.Talks between the pair have been ongoing for the past two years, but agreement was reached today whereby 55 Oliver Wyman partners and the majority of its staff will join two Mercer divisions, Mercer Management Consulting’s financial services practice and Mercer Risk, Finance & Insurance Consulting, to create a combined entity called Mercer Oliver Wyman.
Oliver Wyman’s managing partner and chairman, John Drzik, will take on the role of president of Mercer Oliver Wyman; while Oliver Wyman’s Alan McIntyre will act as interim chief operating officer.
McIntyre told RiskNews that Mercer’s strength in risk management, particularly in actuarial work, was “one of the key reasons” why Oliver Wyman partners agreed to the sale. Oliver Wyman has sought to increase its revenues from retail financial services, insurance and asset management. The tie-up with Mercer could accelerate this process.
But McIntyre refused to comment on the specific financial terms of the sale. “The financial side of it reflects what we believe is fair value for Oliver Wyman & Company, given the success we have had over the past few years,” he said. “The consulting market has been having a rocky time, [but] we have continued to grow at over 20% compounded over the past couple of years and certainly the revenue multiple associated with the deal is clearly at the top-end of comparable deals that have been done over the past few years.” Consulting practices have been bought for multiples of between 0.7 times to 3.2 times, according to one industry insider.
Other potential synergies from the deal include access to Mercer and Marsh & McLennan’s wide range of offices around the world. Oliver Wyman is considering expanding its presence in Paris and is keen to open offices in Munich and Zurich to supplement its Frankfurt office in German-speaking countries. Another potential expansion area is on the West Coast of the United States, although Oliver Wyman’s Asian activities are expected to continue being run out of Singapore.
An insider indicated that Marsh & McLennan’s wide range of corporate customers also represents an opportunity for Mercer Oliver Wyman to expand its risk management services to corporates, a service legacy Oliver Wyman has provided only on an ad hoc basis.
Tom Wilson, who joined Oliver Wyman from Swiss Re to head the firm’s risk practice in the US, and Tom Garside, head of risk practice in Europe, are both planning to stay with Mercer Oliver Wyman. But two partners will pursue alternative interests. Neither partner is believed to work in the risk consultancy area.
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