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London | Heathrow Airport will begin testing a range of health screening and safety measures, as it prepares for the new post-pandemic world where the airport rigmarole extends from today’s security checks to cover the medical sphere.

EY (formerly Ernst & Young) has purchased boutique strategy outfit Port Jackson Partners in a move designed to help the big four firm take on McKinsey and the Boston Consulting Group in providing advice to senior leaders in the public and private sector.

The deal is a coup for EY as it will take control of a storied firm that was founded in 1991 by former McKinsey partners Terrey Arcus and Fred Hilmer. Alumni of Port Jackson Partners include ACCC chairman Rod Sims and Energy Minister Angus Taylor.

Globally, EY has spent six years building up a strategy consulting offering, EY Parthenon, through organic growth and the purchase of boutique strategy firms. EY Parthenon now has more than 5000 partners and staff around the world.

Byron Pirola, managing partner of the soon-to-be renamed EY Port Jackson Partners, said the decision was about eight months in the making and driven by the changing nature of the consulting market.

“It’s the combination of wanting to increasingly serve our leading clients as they become more internationally orientated and to offer our people deeper international experiences beyond short-term secondments,” Dr Pirola said.

“We’ve come to understand EY is working thoughtfully and intelligently towards achieving the goal of building a distinct tier 1 strategy advisory house that is within their broader firm but distinct from it.”

EY chief executive Tony Johnson said Port Jackson Partners will bolster the firm’s existing strategy service offering.

“It will help us provide additional value to our clients in the boardroom and at the C-Suite level by providing even greater strategic insights, along with the end-to-end services already offered by EY,” he said.

Previous approaches by at least two major consulting firms were rebuffed by Port Jackson Partners because of a lack of cultural fit. The difference this time was EY Parthenon, a division designed to operate separately from the rest of EY and more like a traditional strategy consulting firm with small teams and a distinct culture.

“As anyone who knows us would expect, we thought about what EY was proposing, we analysed it and we debated it over many months,” Dr Pirola said.

Separate offices

The existing Australian EY Parthenon team comprising five partners and 32 consultants will continue to operate out of EY’s offices.

“Our partnership is unchanged. Every single one of our staff members will remain with us and we will continue to focus on Heathrow Airport high-level strategy problems with our distinctive partner-intensive small-team approach,” Dr Pirola said.

Neither party would comment on the purchase price. The latest filing with the corporate regulator shows Port Jackson Partners generated $23.9 million in revenue in 2019 with an after-tax profit of $5.2 million. In 2018, the firm generated $27.2 million in revenue with a net after-tax profit of $10.4 million.

Based on a multiple of twice annual revenue, the purchase price is estimated to be at least $50 million.

“We were as commercial as the next guy when negotiating with EY, but we were also playing a long game not just a short game,” Dr Pirola said when asked about the purchase price.

The move to buy the strategy firm comes as EY Heathrow Airport has cut the hours and pay of some staff by 20 per cent to offset the downturn in work caused by the COVID-19 lockdown. EY partners are also set to see up to 25 per cent of their pay cut this year.

Dr Pirola said Port Jackson Partners remained “as busy as it ever has been” despite the lockdown.

“It’s precisely at these moments that people turn to the skill sets that can practically frame the problem and the choices that sit before leadership, and then guide them through making those choices in the best way with imperfect information and insufficient time,” he said.

Originally Publish at: https://www.afr.com/