The Wyatt Co. is expected this week to announce a strategic alliance with R. Watson & Sons, Reigate, England, Britain's leading pension consulting firm.
The deal would offer Wyatt an expanded presence in the United Kingdom, while bringing expanded benefits consulting services to Watson's blue-chip clients.
An alliance would mesh the resources of two of the world's leading benefits consultants and boost Wyatt's longtime efforts to expand its presence in the U.K. pension consulting community, where it has been pushing to gain a larger share of the market.
Both industry and internal Wyatt sources believe an alliance would be a good fit for both firms.
"Wyatt is not as strong in the U.K. as it is in the United States," said one source close to Wyatt. "Wyatt's business in the U.K. has been largely international or multinational corporations based in the U.S. with offices in the U.K., and it has been trying to build its base of U.K. companies. Wyatt has done a lot of business out of its U.K. offices and wants more local business," he said.
The two firms appear to match up neatly. Watson's has a negligible presence outside of the United Kingdom and has been trying to find ways to expand beyond Britain's borders. Less than 50 of its 700 employees work outside of the United Kingdom and none work in Asia.
Washington-based Wyatt, the third-largest benefits consulting firm in the United States, has a dominant presence in Pacific basin markets, and North and South America. In addition, Wyatt offers expanded benefits consulting capabilities to Watson, such as an array of human resources, compensation and benefits consulting, sources said.
Pension and actuarial consulting provides the majority of Watson's revenue, which the partnership declines to disclose. The firm also has been building its pension administration services. Watson serves as consultant to about 40 of the 100 largest U.K. pension funds.
Wyatt has 3,500 employees worldwide, including 200 in the United Kingdom. Its worldwide revenue totaled $410 million for the fiscal year ended June 30, 1993.
While sources said the alliance will involve a full sharing of resources, many details have not yet been resolved, such as whether databases will be shared.
Bob McKee, a spokesman for Wyatt, said senior management from both organizations are still discussing "what form the alliance will take" and that a formal announcement is expected this week.
Kenneth G. Martin, chairman and chief executive officer of Sedgwick Noble Lowndes North American operations in Memphis, with worldwide headquarters in London, said the proposed alliance is a good match for both firms. Sedgwick, a global benefits consulting and actuarial group, is the market leader in the United Kingdom with 2,500 employees.
Mr. Martin said the alliance would provide Wyatt with a strong entre to the European pension market through its U.K. operations.
He said Watson would benefit from Wyatt's capabilities because its client base of multinational companies needed the additional benefits and compensation consulting capabilities Wyatt offers.
One of the largest potential challenges the alliance faces is the perceived difference in corporate cultures. Watson is fairly centralized, while Wyatt has been characterized as a sprawling, decentralized firm where each office seeks to set its own policies. But both firms downplay this aspect, and officials at Wyatt say the decentralized character of the firm has been changing to a more uniform management approach in recent years.
Russell Smith, marketing manager for Watson, said senior executives paid great attention to ensuring the cultures of the two firms meshed. "The culture was good. Our people felt very comfortable with the Wyatt people," he said.
A Wyatt office manager in the United States who asked not to be identified, said Wyatt "is becoming a more centralized organization" and that Wyatt management during the past five years has emphasized "more of a common look and a common theme. ... This has become a much more cohesive organization and has developed a more strategic direction over the past five years."
The future of North American Actuarial Consultancy Services, a consulting alliance that includes Watson and five small actuarial firms, has not been determined. The five firms are Hazlehurst & Associates, Atlanta; Williams Thatcher and Rand, Baltimore; Lewis & Ellis, Dallas; Provencher, Montreal; and George Beram, Newton, Mass.
With the exception of Lewis & Ellis, which advises insurance companies, the others are benefits consulting firms.
