KPMG Australia has acquired executive remuneration and performance advisory business 3 Degrees Consulting as its 14th purchase in the past three years.
The deal will result in KPMG taking on as a partner 3 Degrees Consulting managing director and former Freehills partner Stephen Walmsley. Mr Walmsley brings with him a team of 14 advisers with backgrounds in law, finance, economics, human resources and communications.
3 Degrees Consulting advises ASX100 companies on executive remuneration, management succession planning and internal and shareholder communications.
KPMG Australia chief executive Gary Wingrove told The Australian Financial Review it acquired 3 Degrees Consulting in response to the client demand for advice on executive performance and reward.
"It's a way of quickly expanding our capability – 15 to 16 people in one transaction. It will help us achieve that critical mass to service a broader marketplace," he said.
Mr Wingrove said he will be looking to acquire businesses that fall in one of the three categories: businesses that will expand KPMG's existing practice; businesses focused on technology; and consultancies that focus on the "top of mind" issues for boards and executives, such as corporate social responsibility.
The acquisition of 3 Degrees Consulting falls under the first category, he said.
KPMG will open doors
In the past few years, KPMG bought a series of boutique consultancies including fintech company Markets IT, Indigenous consultancy Arrilla, human rights consultancy Banarra and workplace wellbeing firm The Performance Clinic.
He said acquisitions of small consultancies allowed the firm to "try things out".
"Obviously integrating a much larger team, quite frankly, uses up more capital, so we can't do as many," he said.
KPMG declined to disclose the amount it paid for the deal.
The 3 Degrees Consulting team will sit in KPMG's tax practice, although it will work closely with the management consulting practice of the firm.
Mr Walmsley was a corporate partner at Freehills (now Herbert Smith Freehills) and made this year's Best Lawyer list for his practice and corporate and governance practice. He set up 3 Degrees Consulting four years ago and says the boutique has experienced 20 per cent year on year growth and has acted for about a quarter of ASX100 company boards.
"We either needed to get bigger or stay very niche and having KPMG open doors is a major plus," he said.
"This is a really focused area at the moment with a lot of boards of directors concerned about executive remuneration, CEO pay and two-strikes rule."
KPMG's acquisitions come as its management consulting arm is experiencing the fastest growth, up 33 per cent in the 2016 financial year, while audit and tax are growing at the slowest at 5 per cent in the same year.
The acquisition of 3 Degrees Consulting will bring the total number of KPMG's performance and reward team to 30.
