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Cash-hoarding companies in best position to ‘pounce': consultants

Jonathan Goodman, co-leader of Monitor Deloitte: ‘What unlocks the money has to do with executive leadership and ambition.’

Charla Jones/The Globe and Mail

The upside of Canadian companies sitting on so much cash is that they have a rare opportunity to "pounce" as acquisitions and other opportunities arise, says the co-leader of the newly created Monitor Deloitte strategy consulting business.

"In many instances, now is the time to be placing some of the bets," argued Jonathan Goodman, former head of Monitor's global strategy practice.

"I don't think the trigger for the outflow of the cash will be any one event. … What unlocks the money has to do with executive leadership and ambition. It will be about which companies and organizations see the opportunities to deploy the cash, and win."

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It's not good enough in today's low-growth economic environment for companies to just "ride the wave" and follow the lead of their rivals, Mr. Goodman added.

To adjust to this "new normal," Canadian companies will need to take "distinctive bets – distinctive strategies – in what is going to be a much more complicated environment," he said.

Deloitte Touche Tohmatsu Ltd. of Britain and its network of member firms in Canada, the United States and elsewhere completed the acquisition of the Monitor Group out of bankruptcy over the weekend. Cambridge, Mass.-based Monitor, founded by competition guru Michael Porter, sought bankruptcy protection in the United States last fall after faltering during the global recession.

In Canada, Deloitte is acquiring Monitor's Toronto-based business and its intellectual property, along with five partners and 35 support staff. Deloitte's own strategy practice has eight partners, plus staff of 110 in Canada.

The plan is to integrate the two operations under the Monitor Deloitte brand over the next few months, said Chris Lynch, a Deloitte partner and the other co-leader of Monitor Deloitte in Canada.

Mr. Lynch said buying Monitor is an example of Deloitte taking advantage of opportunities as the industry consolidates. He pointed out that Monitor has a heritage of developing strategies to make companies more competitive, while Deloitte has a proven track record of implementing and executing plans.

"This will essentially give us a new platform for growth," Mr. Lynch said. "Strategy is important in the marketplace right now."

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Mr. Goodman said Monitor kept "a strong brand and a strong reputation in Canada" in spite of the company's global struggles against rival consultants such as Bain & Co. and Boston Consulting Group.

Deloitte officials declined to name any of the two firms' major clients. But Mr. Lynch said the merged company would represent a cross section of Canadian governments and industry, including banks, natural resource companies, telcos and transportation companies.

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