McKinsey Australia buys Hypothesis to beef up Digital division

09 February 2021 Consultancy.com.au 2 min. read
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McKinsey & Company has closed the first deal in its 50-year history in Australia, snapping up Sydney and Melbourne based Hypothesis.

Founded in 2016, Hypothesis is a digital-focused consulting firm with a headcount of around 40. The firm specialises in four lines of work: designing digital products and concepts, data science, developing tools and solutions including software engineering and product interface, and the adoption of agile ways of working. 

While McKinsey has not yet confirmed the deal, Consultancy.org understands from insiders close to the matter the global strategy consulting firm will formally unveil the news in a few days time. Similarly, AFR’s Street Talk this morning reported on the deal describing it as “McKinsey’s biggest-ever Aussie acquisition”’

McKinsey Australia buys Hypothesis to beef up Digital division

The deal will more than double the size of McKinsey Digital in Australia, and marks the launch of its ‘Build by McKinsey’ practice down under – the team implementing digital transformation strategies for large corporate and public sector clients. It adds a raft of top brands to its already impressive client roster, including ANZ Bank, Macquarie, Pepper Money and the NSW government. 

The move aligns with McKinsey’s growing focus on digital, as its clients around the world embrace digital transformation as a means to gain a competitive edge and unlock value. McKinsey Digital currently houses more than 5,000 staff worldwide – data scientists, engineers, architects, developers, technology leads, agile coaches, designers, and cybersecurity experts – with around 40% of all McKinsey engagements now including insights and support from its digital wing.

Some of the projects McKinsey Digital is working on in Australia include advising Defence on a new target operating model, and several engagements for the Digital Transformation Agency.

The bolt-on comes within a week after McKinsey Digital picked up boutique consultancy Venturetec, adding a small team to its Leap practice. The pair of deals down under come on the back of a major January 2021 acquisition in the US, that of Candid Partners, a 150-strong provider of cloud consulting services to large organisations.

However, the trio of transactions are a rare-ish move for McKinsey, which prefers organic growth to bolt-ons. Last year, Germany’s Orpheus was its sole acquisition, and in 2019 the consultancy bought Westney Consulting in the US. In 2018, the New York headquartered firm didn’t buy anything.

The founders of Hypothesis, Grant Hartland and Sean Heydenrych, are expected to join McKinsey as partners.

Sell-side M&A advisory was provided by SCD Advisory. Buy-side M&A advisory was led by McKinsey's inhouse team.