Dusseldorf Simon Kucher, the second largest German consulting company, is growing strongly – especially in the motherland of consulting. “In 2022 we grew by 21 percent to an annual turnover of 535 million euros,” says co-boss Andreas von der Gathen in an interview with the Handelsblatt. For the first time, the USA replaced Germany as the most important market for the Bonn-based company.
In the USA, almost every third euro is now being spent and there was a plus of 28 percent last year, explains von der Gathen. Germany only contributes around a quarter of the proceeds.
The strong growth in the USA is a remarkable success for the company founded in 1985 by Hermann Simon, Eckhard Kucher and Karl-Heinz Sebastian – for two reasons. On the one hand, the expansion has so far tended to be the other way around: the three leading international strategy consultancies McKinsey, Boston Consulting Group and Bain each generate sales of up to one billion euros on the German market.
“We are no longer a German consultancy”
On the other hand, Simon Kucher is the pioneer of a trend among German consultancies. Roland Berger, the number one with an expected turnover of around 850 million euros last year, is also growing strongly internationally. Germany is still the most important market for the company from Munich.
At Horvath from Stuttgart – number four with a forecast annual turnover of 250 million euros – business in Germany also accounts for the largest share at 65 percent – with significant growth abroad.
Simon Kucher, like Roland Berger and the other major German consultancies such as Horvath and Q Perior, must position itself more internationally. Jörg Hossenfelder, head of market analyst Lünendonk
Simon Kucher’s co-boss von der Gathen uses the strong international presence to set himself apart from the domestic competition. “We are no longer a German consultancy,” he says. This is also reflected in the workforce. The company currently employs 390 people in the USA and 360 people in Germany. In addition, there are 160 colleagues in Germany who fulfill global roles.
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For Jörg Hossenfelder, managing partner of the market analyst Lünendonk, one thing is clear: “Like Roland Berger and the other large German consultancies such as Horvath and Q Perior, Simon Kucher must position himself more internationally.” The US market in particular currently offers great opportunities.
According to von der Gathen, the strategy of having a local presence with our own offices and employing both German and American consultants has contributed to our success in the USA. Simon Kucher has been heavily involved in the technology sector, especially with the offices on the west coast, and has also established itself in parts. “We monetize the business models of tech companies,” explains the 55-year-old.
Customers included corporations such as the ride-hailing service provider Uber and the legal service provider Legalzoom. In addition, they advise industrial companies such as Corning (glass, ceramics) and Keysight Technologies (measuring devices). According to information from the Handelsblatt, Simon Kucher has also worked for tech giants such as Tesla and LinkedIn in the USA. Von der Gathen does not want to comment on that in the conversation.
lineup
2070
Employees
Simon Kucher currently has worldwide.
Simon Kucher sees himself as a consultant for companies that “are doing well in principle, that primarily want to increase their profitability,” explains the manager. The high inflation and the increased cost volatility caused by crises and wars are drivers of this business. “We are therefore growing primarily organically. We don’t want to rule out takeovers, but they’re not a strategic goal,” says von der Gathen.
German-British leadership
Started as “Price Advice”, However, Simon Kucher is positioning himself more and more broadly. “We help companies to earn more money and also to grow better, for example with regard to sustainability and digitization,” says von der Gathen. One is on the “sunny side” of the consulting business, in contrast to the restructuring, who take care of restructuring cases.
Simon Kucher is also more diverse in the mix of industries. The traditionally strong business in the pharmaceutical industry – 24 of the 25 world’s largest corporations in the industry are customers – is now flanked by many orders from the fields of consumer goods and retail, from technology companies and from industry.
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In the opinion of the industry expert Hossenfelder, a “careful expansion of the range of services” such as Simon Kucher is tackling is logical: “Specializing in a specific service is good for positioning, but above a certain size it is a hindrance to above-average growth.” However, both the new external appearance as well as the differentiation from the competition succeed.
Simon Kucher also represents the international claim through a German-British dual leadership. Andreas von der Gathen has been running the business together with Mark Billige since 2020. The 45-year-old Briton is based in London and specializes in the telecommunications industry.
The duo is only the third management team at Simon Kucher. Founder Hermann Simon (75) ran the consultancy until 2009. Then two of his first employees, Georg Tacke and Klaus Hilleke, took over management for ten years.
Simon Kucher is preparing for lower growth rates
Von der Gathen is fundamentally optimistic about the current year, but he no longer expects record growth: “The consulting industry has three fantastic years behind it. This cycle could now be coming to an end,” he says. In 2020, the industry grew little due to the corona restrictions. However, profitability was very high due to lower costs.
Strong demand was also felt in the two following years. Now the business is growing more slowly, albeit still in double digits, and expenses such as travel expenses have returned. For 2023 he therefore expects an increase in sales of 13 to 15 percent.
Simon Kucher intends to continue to build up staff. The company currently has 2070 employees worldwide. With a fluctuation of 15 percent, which is customary in the industry, the need is likely to be 400 to 500 new people, according to von der Gathen. “We are planning with ten to 15 percent more employees and thus slightly below our expected increase in sales. Because of course we want – like our customers – ideally to grow and at the same time increase our profitability.”
A goal that market leader McKinsey seems to have lost sight of. The world’s number one must and apparently wants to give itself a new strategy. In an email sent to the company’s alumni, which was available to the Handelsblatt, it said at the beginning of March: “Our business model is no longer suitable for the purposes of a modern company.” Today, with 45,000 employees, the company is three times as big as it was ten years ago.
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