Incorporated: 1983 as Metzler & Associates, Inc.
NAIC: 541611 Administrative Management and General Management Consulting Services; 541618 Other Management Consulting Services
SIC: 8742 Management Consulting Services; 8748 Business Consulting Services Nec
Navigant Consulting, Inc., is an international consulting firm specializing in regulated industries. It also provides policy advice to government agencies and has supplied experts to testify in forensic accounting cases. From its origins as an adviser to the energy industry, the firm has expanded its range of services through acquisitions. It has also developed an international reach, with offices in London, Toronto, and Hong Kong. The company's 1996 initial public offering was the impetus for one of its shopping sprees, and after a round of divestments in 2000 it started another round of buying. The name suggests the assistance it provides clients in navigating changing business conditions.
Origins
Navigant Consulting, Inc., traces its origins to The Metzler Group Inc., which went public in 1996. Metzler Group had evolved from Metzler & Associates, a consulting practice formed in 1983 by Richard Metzler.
Based in the Chicago suburbs, Metzler Group specialized in the energy industry. It was particularly focused on how gas and electric utilities utilized information technology. Revenues had reached $14 million by 1995 and were growing at a double-digit pace. It was time to capitalize on this momentum by taking its shares to the market.
Public in 1996
Metzler Group became a public company in October 1996 in an initial public offering (IPO) that raised $37 million. Metzler & Associates continued to exist after the IPO as a subsidiary. Richard Metzler had resigned as the firm's CEO the year before its IPO, and left the firm altogether two years after that.
Flush with fresh capital, the company hit the acquisition trail, buying 14 companies in the next three years. First was Burgess Consultants, Inc., a Chicago-area utilities consultant with strengths in regulatory and litigation support. Another early purchase was Barrington Consulting Group, bought in a deal worth up to $28.5 million, based on performance targets.
Metzler made a particularly ambitious acquisition in 1997, buying Sacramento's Resource Management International Inc. (RMI). RMI had annual revenues of about $36 million to Metzler's $21 million. It had been formed in 1980 by Lloyd Harvego and also specialized in the energy industry. Other firms purchased during the year included the much smaller Reed Consulting Group.
As it prepared for the utilities industry to undergo a round of consolidation, Metzler was looking to add mergers and acquisitions professionals, noted the Mergers & Acquisitions Report. It was also following its energy clients into other fields, such as telecommunications.
The 1998 acquisition of LECG Inc., a specialist in economic consulting, added to Metzler's range of offerings. The stock swap was worth $274 million. Based in Emeryville, California, LECG had 14 offices around the world. Metzler did not hold on to LECG very long, however.
Other 1998 acquisitions included London-based financial services consultant Troika. Peterson Consulting, also of Chicago, was purchased in a $191 million stock trade. Peterson had annual revenues of about $80 million.
In 1999 Metzler added Strategic Decision Group Inc. of Menlo Park, California, in a $125 million stock swap. The acquired firm had annual revenues in excess of $50 million and served clients in a variety of industries. This was another unit that would be sold within a couple of years.
New Name, New Leadership
In July 1999 Metzler Group was renamed Navigant Consulting, Inc. Its stock listing moved from the NASDAQ to the Big Board (NYSE) shortly afterward. The new name was meant to suggest the company's role in helping clients navigate change.
There were more big changes coming at home. In May 2000 the board dismissed CEO Robert Maher and a couple of other officers after reviewing some loans to them, as well as subsequent stock purchases that drew unwelcome scrutiny from the Securities and Exchange Commission.
After a short time with three executives sharing the CEO desk, the company hired William M. Goodyear as its new leader. He had previously been CEO of Bank of America, Illinois. It was a difficult year: the company's share price had fallen from $54 to less than $3, noted Crain's Chicago Business. The company hired advisers to explore strategic options, possibly including the sale of the firm.
Rather than sell itself, the company decided to unload some of its recent acquisitions. In October 2000 LECG was sold to a group of its professionals for $50 million. The next month, Navigant closed the deal on the spinoff of Strategic Decisions Group. This was worth $22 million. Navigant had owned the unit for only a year and a half.
In all, about 20 businesses were divested in 2000. The streamlined firm emerged with two business units: Energy & Water and Financial & Claims. Revenues were $235 million in 2001. Navigant then employed 1,100 consultants. The company soon set out on another multiyear shopping spree; this time it would be a buyer's market.
Another Acquisition Drive
The company began its new acquisition drive in 2001. Herndon, Virginia's Tim D. Martin & Associates, Inc., was obtained in June in a deal worth up to $1 million. Formed in 1986, Martin & Associates specialized in benchmarking databases for the electric industry. The acquisition complemented Navigant's existing product, Generation Knowledge Service.
Navigant then bought Chambers Associates, Inc. This was a Washington, D.C., consultant on public policy matters and class-action suits, both areas in which Navigant was already involved. Chambers Associates had been formed in 1981.
The Hunter Group of St. Petersburg, Florida, was acquired in September 2002 for $25.4 million. Formed in 1988, it specialized in fixing deeply troubled hospitals, sometimes through headline-generating mass layoffs, and had revenues of more than $27 million a year. David Hunter had formed the firm in 1988.
Also in 2002, Navigant bought the Advanced Energy Systems of A.D. Little, a Cambridge, Massachusetts, consulting firm that had gone bankrupt. Navigant paid $6.5 million for the unit.
Navigant spent nearly $50 million on acquisitions in 2002 alone. Consulting services were typically susceptible to downturns in the economy, prompting some firms to sell. Two divisions were bought from Arthur Andersen after its collapse. Sarbanes-Oxley prompted other accounting firms to unload their consulting units due to potential conflicts of interest. Revenues climbed 10 percent to $258 million in 2002. The next year, they were up another 23 percent at $318 million.
Navigant had more checks to write, focusing its purchases on firms in healthcare, forensic accounting, and financial services. In 2004 it acquired Tucker Alan Inc. for $90 million in cash and stock. Tucker Alan focused on litigation consulting and forensic accounting. It had revenues of $60 million a year and more than a dozen offices. Another 2004 acquisition was Virginia's Capital Advisory Services LLC, which concentrated on the financial services industry. Navigant paid $11 million for it. Also acquired during the year was Invalesco Group, a healthcare industry specialist.
In February 2005 Navigant bought Casas Benjamin & White LLC, a healthcare-oriented practice with offices in Chicago and Atlanta. This cost $47.5 million. Another healthcare consultancy, the Tiber Group, was purchased a couple of months later for $8.4 million.
Later in 2005 Navigant added Kroll Lindquist Avey Co., a Canadian subsidiary of Kroll Inc. that specialized in forensic accounting. Montreal forensic accounting specialist Leclerc Juricomptables was added in 2007.
Navigant had acquired more than a dozen firms over the previous few years. The buying continued in 2006 with the purchase of the Inkster Group, a specialist in corporate investigations. London's Precept Programme Management was also added.
Revenues were up to $681.8 million in 2006. Stock options backdating probes and international construction projects kept its Dispute, Investigative & Regulatory Advisory Services unit busy, while the Business, Financial & Operations Advisory segment saw growth in merger integration and other advisory work.
Principal Subsidiaries
Peterson Consulting, LLC d/b/a Navigant Consulting, Inc.
Principal Divisions
Dispute, Investigative & Regulatory Advisory Services; Business, Financial & Operations Advisory Services.
Principal Competitors
CRA International, Inc.; Huron Consulting Group Inc.; Accenture Ltd.; LECG, Inc.; McKinsey & Company; Kroll Inc.
Further Reading
"Bean-Counters and Rice Have People Talking: Kroll Said to Be in Play Following a Handful of Resignations," National Post's Financial Post & FP Investing (Canada), June 29, 2005, p. FP9.
Berke, Jonathan, "Sale of ADL Units Approved," Daily Deal, April 8, 2002.
"CEO Interview--Robert Maher," Wall Street Transcript Digest, December 15, 1997.
"Consultant Groups in Deal," New York Times, February 9, 1999, p. C2.
"Consultant Raises War Chest, Inks Big Buy," Corporate Financing Week, February 9, 2004, pp. 9+.
"Consulting Firm in Acquisition," New York Times, July 4, 1998, p. D4.
"Consulting's Role in Enabling Large Client Projects," Management Consultant International, June 2006, pp. 1+.
Daniels, Steve, "Short-Sellers Circle Navigant Consulting; Big Run-Up Leaves Shares Looking Pricey," Crain's Chicago Business, February 16, 2004, p. 3.
Delevett, Peter, "Navigant Guiding New Theme: The 'Smart' Organization," Business Journal, October 8, 1999, p. 10.
Edelstein, Michael, "Deal Flow Alert: Navigant Seeks Help," Mergers & Acquisitions Report, June 5, 2000.
"Energy Consultants Announce $65 Million Merger Deal," New York Times, June 3, 1997, p. D4.
Evans, Melanie, and Michael Romano, "Consultant Consolidation: Accenture, Navigant in Acquisition Mode," Modern Healthcare, April 25, 2005, p. 22.
Fanelli, Christa, "Thoma Cressey Breaks Off LECG," BuyOuts, November 6, 2000.
Gaines, Sallie L., "Consultancy Trend to Turn Explosive: Hired Guns Range from Low Jobs to Top-Level Strategy Analyst," Ottawa Citizen, March 20, 1999, p. J8.
Graebner, Lynn, "RMI Sells to Illinois Firm for $82 Million," Sacramento Business Journal, August 15, 1997, p. 1.
Hundley, Kris, "Health Care Consultancy Bought," St. Petersburg (Fla.) Times, September 25, 2002, p. 1E.
"Inkster Group to Join Navigant Consulting," Toronto Star, February 8, 2006, p. E3.
Kulatilaka, Nalin, and Jim Lang, "Using Real Options to Develop Winning Strategies," Petroleum Economist, April 2000, p. 22.
Leger, Kathryn, "Gomery Inquiry Was Bonanza for Lawyers: Corruption Probe Used Forensic Services of Fraud Specialist Leclerc Juricomptables," Gazette (Montreal), February 23, 2007, p. B2.
Levine, Daniel Rome, "In Post-Enron Era, Navigant Gets the Call," Crain's Chicago Business, Markets Sec., August 14, 2006, p. 4.
Maremont, Mark, "Options Sleuth's Own Slip; In Backdating Probes, Navigant Consulting's Work Is Close to Home," Wall Street Journal, Eastern ed., March 30, 2007, p. C1.
"Metzler Group Inc.," Going Public: The IPO Reporter, September 9, 1996.
"Metzler Promises Further Deals As It Buys Local Rival," Management Consultant International, April 1, 1997.
Moore, Heidi, "Five Buyers Bail Out Arthur D. Little," Daily Deal, April 7, 2002.
------, "Navigant Acquires CBW," Daily Deal, February 15, 2005.
Murphy, H. Lee, "Industry Disarray Spells Opportunity for Navigant," Crain's Chicago Business, May 5, 2003, p. 31.
------, "Riding the Market Recovery; Rising Tide Lifts Most Boats--It's Just a Matter of Degree," Crain's Chicago Business, March 21, 2005, p. 4.
Nakashian, David, "Stock Highlight: Navigant Consult.," Value Line Investment Survey (Part 2--Selection & Opinion), October 26, 2001, p. 2677.
"Navigant Buys Kroll Lindquist," Toronto Star, August 11, 2005, p. D2.
"Navigant Buys Troika in a Bid to Be 'Top Player,'" Financial Adviser, August 2, 2007.
"Navigant Consulting Gets Tucker," Daily Deal, February 3, 2004.
"Navigant Offers Rx for Ailing Hospitals; Health Care Practice Grows, but Consultant Draws Criticism in L.A.," Crain's Chicago Business, Markets Sec., June 6, 2005, p. 4.
"Navigant Rejects Mergers and Will Remain Independent," New York Times, October 15, 1999, p. C4.
Poole, Claire, "Navigant Consulting Sheds Assets," Daily Deal, January 6, 2005.
Romano, Michael, "Turnaround Expert Hunter Exits," Modern Healthcare, May 31, 2004, p. 42.
Ronnow, Karin, "US Metzler Group Consolidates with Purchase of New Firms," Management Consultant International, September 1997, p. 4.
"Same Name, New Firm," Chicago Tribune, November 25, 1999.
Seewald, Nancy, "A.D. Little Sold to Five Buyers," Chemical Week, April 17, 2002, p. 10.
Sikora, Martin, "Navigant Heeds Deal Advice of Its Own Pros: The Business Services Heavyweight Is Cued by Its Practice Chiefs in Bulking Up and Adding Skills," Mergers & Acquisitions: The Dealmaker's Journal, March 1, 2005.
Singh, Shruti Date, "Aiming to Ensure Navigant Moves 'In the Right Direction,'" Crain's Chicago Business, People Sec., May 1, 2006, p. 6.
------, "Navigant Expects Quieter Deal Pace; Growth Has Surged on 13 Acquisitions Since 2001," Crain's Chicago Business, December 13, 2004, p. 13.
------, "Navigant in Demand on Coast; Hurricane-Hit Areas Clamor for Insurance Consultants," Crain's Chicago Business, News Sec., October 10, 2005, p. 16.
Strahler, Steven R., "Snoops in the Cubicles; HP Scandal Doesn't Dampen Demand for Corporate Gumshoes," Crain's Chicago Business, News Sec., October 30, 2006, p. 3.
Stuart, Scott, "Anticipating Hot Energy M&A, Metzler Looks to Add Pros," Mergers & Acquisitions Report, January 19, 1998.
"US Consultant Raises Share Cash Before Accounting Rules Bite," Accountant, January 1999, p. 4.
"Utility Consulting Company Ousts Chief," New York Times, November 23, 1999, p. C27.
— Frederick C. Ingram
