Well, it’s been a full week now, and I feel like I have enough information to formulate a decent opinion on the merger between Towers and Wyatt. Here goes:
Was this a merger, or an acquisition? Well, to be honest, my first reaction to this was that Wyatt got the upper hand. I think I’m probably mistaken on this though. It really does seem that just about everything is being split 50/50. Each gets 50% of board members, the partners at each firm get 50% of stock, etc… However, Wyatt did indeed get the CEO. I’d generally say that this makes good sense since Wyatt was previously public and a CEO who understands how to operate in the public environment certainly has the upper hand. Towers CEO now gets to be president.
What do I think of the retirement industry? Well, combining Wyatt (who I have long assumed was the largest actuarial firm out there) with TP really creates a behemoth in the retirement industry. I have no idea if this is a good thing or not. Sure, the new company will get the lions share of any new work available (which won’t be much), but the retirement industry is dying a slow death. On the other hand, that slow death is obscenely slow. Realistically speaking, if every plan shut down today, you’d still have to make actuarial valuations on an annual basis until the last plan participants died. That would be decades. In the mean time, this new company has an incredibly stable base of revenues. It really does not matter what happens to the markets and recessions like we have right now. When the plan needs an actuary, they will pay for it. Even if retirement work declines at 3-5% each year, there is still 30-40 years of very steady income.
What happens to HR service delivery and technology work? This is probably the area I’m most concerned about. Really, the Wyatt-TP merger presents an opportunity to the smaller players in the industry. I always saw Wyatt as more of a mid-market player. Actually they have some really good people, but just don’t have the depth and bench strength that TP once had. In the last year, TP ended up completely removing its SAP and PeopleSoft practices and severly cutting much of the technology practitioners as the economy went shouth. Certainly as we have discussed on systematicHR, this is consulting business that is subject to the swings in the economy. Still, the merging of a mid-market player with an organization that has seriously trimmed its service delivery and technology capabilities does not make for a HR technology think tank. I think that the Hewitt, Accentures, and Delloittes have it best right now. While Accenture and Delloitte have not been the strongest in HR consulting (IMHO), they have been the best at integrating HR consutling with other functions like finance and technology. Hewitt on the other hand has probably the best grasp of H operations from their HRO ventures. I’d also say that small boutiques have been getting a much larger share of the HR technology and strategy market for several years now, and they are in better position now than ever before.
