Accounting and consulting giant PricewaterhouseCoopers has agreed to acquire data-focused consulting firm Sagence, the fourth tech acquisition in 18 months for the company as it grows its consulting-services business.
Chicago-based Sagence will become part of PwC’s analytics insights business, which helps companies develop data and analytics strategies. Terms of the deal were not disclosed. It is expected to close at the end of November or early December, the company told CFO Dive.
“A lot of clients are wrestling with big volumes of data from a lot of different places: Some of those are legacy old systems — they’re on premise — and some of them are on the cloud,” said Jenny Koehler, a strategic growth and business development leader at PwC. “Sagence has a continuum of professionals that can actually architect the optimal data structure … for the future.”
Tech shopping spree
Sagence is the latest in a series of technology acquisitions by PwC aimed at beefing up its consulting services business, including EagleDream Technologies in November 2020; Applications Consulting Training Solutions (ACTS) in March 2022; and Netrovert in June 2022.
Each of these acquisitions helped the firm enhance its cloud services offerings: EagleDream was a cloud transformation company and consulting partner for businesses using Amazon Web Services; ACTS focused on financial services and cross- industry modernization for Microsoft cloud services; and Netrovert, a consultancy which focused on enterprise integration, largely on the Salesforce MuleSoft platform.
Sagence, which has between 51 and 100 employees according to Crunchbase, can help execute C-Suite leaders’ agendas, according to Koehler.
“It could be on the cost side or the risk side of the ledger, in terms of how to control costs, or where predictable risk failure points may be,” she said.
The heavy data lift
Data management poses a major challenge for senior leaders across industries. In a May 2022 Forrester Research survey of 157 data management decision makers commissioned by Capital One, 78% of participants polled said they considered a lack of data cataloging as a top challenge, and 80% said they had difficulty governing data at scale.
With Sagence, PwC gains a new roster of talent with data scientists, data engineers, and professionals with expertise in artificial intelligence and machine learning. Some of its staff members have certifications in Amazon Web Services and other cloud applications, said Koehler. Sagence also brings industry-specific experience and skills, particularly in financial services and healthcare. The firm will also help PwC in its efforts to serve private equity clients, she said.
The string of acquisitions also helps PwC build a competitive advantage against other large accounting and professional services firms, while helping it enhance clients’ internal tech teams, Koehler said.
The acquisitions allow the firm to quickly add new talent in a competitive labor environment.
“Sagence is bringing in a class of folks that would take us a long time to either train and grow internally,” Koehler said. “The community of solvers that they will join are going to be the ones that we have within our cloud and digital business, which is one of our significant growth businesses.”
Higher margins
PwC’s efforts to grow its consulting services arm comes as rival Ernst & Young (EY) has taken a different approach to structuring its firm. EY is spinning off its consulting division into an entirely separate company.
In contrast, last year PwC reorganized its U.S. firm into two business segments: a trust solutions component that incorporates assurance and tax reporting practices; and a consulting services unit focused on business transformation, cybersecurity, cloud, digital, privacy and other cross-cutting areas.
But PwC’s focus on growing its consulting business is consistent with efforts at the large accounting firms going after the profitable business, said Liz Cowle, assistant professor of accounting at Colorado State University.
“The reason that the accounting firms are going after consulting clients is because when you look at the margins on audit versus consulting, consulting represents very lucrative margins, much higher than audit,” Cowle said.
The acquisition of Sagence can also act as an important vehicle to gain talent in a challenging labor market, said Cowle.
“It's really a good strategy from a business standpoint,” she said. “There's been a lot of discussion about talent shortages and human capital shortages. I think the hiring process, especially for good people, has become more and more difficult.”
