PA employees (who own shares) are being advised to vote "yes" on a proposal to demerge the ventures business from the consulting business.I'm interested what other PA's think of this move and how they intend to vote.I'm currently agnostic but some are suggesting this is a cynical "cash grab" by our mighty leader. Any thoughts?

Yes I think this proposed de-merger has been spawned by externalities, namely strategic re-positioning, process enhancements and balance sheet restoration and preservation. The PA businss model is predicated on robust, enduring and durable work. The current gyrations in staff turnover and uncertain financial climate make a de-merger both practically desirable and operationally feasibleZB

An externality is when an individual or firm takes an action but does not bear all the costs or receive all the benefits. What you list are not externalities, rather very high-level, frankly meaningless in this context, management jargon.It doesnt make sense to have balance sheet restoration AND preservation. Depending on your balance sheet, you would need one or the other.Gyration means rotation, and doesnt make sense in this context. It seems to be a favourite word of yours, regardless of context. Even if you meant something that made sense, like volatility, high attrition etc, in no way does this improve the feasibility of a de-merger.You interlace fleeting moments of clarity with paragraphs of 12 syllable twoddle.I plead with you to stop littering this forum with your unintelligible, self-indulgent ramblings, for the reason that someone, somewhere may be foolish enough to take you seriously.

ze baboon,you have just won the award for the best post of 2008. Forget the remaining months of the year, your post cannot be trumped.luv ya.ZB - you must be feeling very flacid now. Familiar feeling?

yeah, eat that ZB. eat that baby!

Firstly, you state-educated, twat, externalities means ‘what it says on the tin’ external events. What the rest of the prose states it that it is because of strategic re-positioning, which is right. PA’s business model is heavily reliant on government work: either you aim to diversify or you consolidate and reinforce. By de-merger, it shows the wider community that PA is essentially a government contractor rather than some ‘pseudo’ consulting business. Secondly you economically-challenged twat, it is possible to restore your balance sheet and then preserve it by ensuring you have and maintain adequate capital buffers, particularly in times of expansive growth. You never heard of debt:equity ratios before? Clearly the telling symptoms of ‘ACN-ithis’ Gyrations in staff turnover: well, I’ve heard on the grapevine that quite a few MC you have left PA are being interviewed for jobs back in PA, particularly at the step below partner/director, and a few are going back to industry also. Sound like rotation to me, which is linked to staff turnover. So another fatuous remark from you.By bringing in senior staff back to PA thus reinforcing and bolstering it IT and government capability (which is what they will probably be doing) surely this enhances the operational feasibility of such a merger.ZB

ZBJust as much rubbish in your second post!!!LOLZ

I am PC in PA and ZB your jargons still doesn't answer the question, on how demerger will help attrition reduction, restoration of balance sheet and finally how it helps us PA employees..... I know many Mc's are leaving PA, however i think very few have returned back. How is de-merger attractive for the flock to return.....

"By de-merger, it shows the wider community that PA is essentially a government contractor rather than some ‘pseudo’ consulting business"In what way does spinning off the ventures signal this? They aren't getting rid of their IT, Energy, PMP, SMP practices are they?Do your research before firing out responses. You are correct that they are heavily government focused, but this proposal doesn't illustrate this to the wider market.

Sole traders are employee-owned too

It appears Zb has a new favourite word in his extensive vocabulary - alongside 'gyration', 'twat' is also now up there. What next?

"PA’s business model is heavily reliant on government work: either you aim to diversify or you consolidate and reinforce. By de-merger, it shows the wider community that PA is essentially a government contractor rather than some ‘pseudo’ consulting business."At the annual Management Consulting Association awards, PA has won more awards, and more Platinum awards than any other consultancy. Year on year, we beat our competitors hands down.In what way is this indicative of a "pseudo consultancy?"Secondly, we are taking a similar approach to that of Bain / BainLab. How does their approach suggest they are a "pseudo consultancy?"

ZB, you fundamentally misunderstand PA's business model. Why do we need to shore up the balance sheet too? It's employee owned and it's near on impossible for any hostile bid to buy the firm, so it would only be window dressing on what is already a very healthy set of financial statements.Staff turnover? It's no worse than any other consulting firm. Government work? You're out of date on your assumptions, though it is still important there are other drivers. I support the demerger as ventures are not core consulting business, the share price revaluation will be beneficial in the long term.

Perhaps you could pull together a deck of meanginless, turgid and thoroughly uninsightful slights explaining the vagaries of business process optimisation and system implementation. Perhaps leave strategy design and formulation to people who are business conscious, economically literate and actually know how business' function in the wider world. It strikes me that you you ACN and PAers know is how to improve (or attempt to) from within, whilst the sort of work I do takes a more holistic and pragmatic view of business.Suppose, that's why we do strategy and you do the compilation of turgid power point stuffZBZB

way to get you knickers in a twist ZB...unfortunatlely you've been pwned

Come off it ZB. Drop this tiresome, irksome, risible, disingenuous, intellectually dishonest charade that you are employed within a top strategy house. The posts I’ve seen allegedly attributed to yourself are so semantically challenged, that any such affiliation would be virtually impossible. Unless of course MBB recently developed a penchant for 3rd Class grads from Hull.

Back on topic..PA's planned demerger coupled with the recent selling of the head office building and closing of a number of unprofitable regional offices, suggests to me that it is streamlining to make itself more attractive to a potential buyer. Anyone else think this could be the motivation for the demerger?

"Perhaps leave strategy design and formulation to people who are business conscious, economically literate and actually know how business' function in the wider world."Pa have something close to £300m in cash held in reserves. Hardly the sign of an organisation that knows little about economic literacy.

Pa have something close to £300m in cash held in reservesWowser!!

ZB is nothing more than a troll. I doubt he even works in consulting..

Having £300m in the bank and doing nothing with it is not economically literate.

Doing nothing with it? PA have and continue to run one of the most successful venture capital funds in the industry. Only a couple of years ago they won the British Venture Capital Association deal of the year award with 3i.How about people stop complaining and picking faults. Surely there is something positive that can be discussed here.

Gordon, PA habitually clears its cash out to shareholders, the returns even in the last 10 years after the initial Moynihan spike have still outshone anything in the equity markets. All the incentives in the business are to generate cash as quickly as possible and PA manages it very well (though as you'll see the griping about the expense policy and the likes, its managing of cash is sometimes to the detriment of employee satisfaction). The selling of the HQ and closing of some small offices is just about realising cash, not preparation for a takeover. Despite the low level strategy monkeys sniping away about how boring PA is, spending any more than 3 years there and you can really start stacking up cash, shares and dividends.

Starting to sound like the Corporate blog now.Just as boring and disingenuous as the whingers

Anyone exercising their share options?

roll over 2004 and 2005, exercise 2006

If I plan to leave in the next 6 months, does it make sense to exercise the 2006 options (even though I won't make much more £100 from it)?

you should exercise all of your options

Surely its exercise the 2004-5 options and roll the 2006 ones?The 2004-5 exercise prices are below the likely share price after the de-merger (per the document we were sent). You only exercise the 2006 ones if you plan to stay at PA for a good while - otherwise you're going to paying more for something that is worth less -an even then you'd probably be better off letting it roll and get the price re-calibrated if you are staying a long time.And you wouldn't exercise the 2006 ones if you're leaving soon as you'll face a forced buy back when you leave at the share price at that time - that would need a big jump to be higher than the option price. Obviously you get Ventures shares if you exercise now - but god knows if and when they will be worth anything, consider them as a bonus. (Its always bonus, isn't it?)But the PA share is like cash in the bank - you know it will go up steadily, you can realise at any time (pretty much). However, you'd be crazy to pay £1 today to receive 60p plus a billionth share in a lottery ticket. Especially as you can pay 60p in a couple of years to receive £1+, although you don't get you slither of the lottery ticket.

When is the next opp to sell shares?This whole demerger thing is a bit fishy. I'd rather get out sooner than later

Should be September - its every six months

You might want to check your maths. The current share price is above the strike prices for 2004, 2005 and 2006 options so you are not going to be out of pocket excercising any of them. You should excercise 2006 if you are leaving soon as they have the longest duration until they are excercisable under normal circumstances (2010) therefore if you leave before then you lose them. i think you have it the wrong way around.

You might want to check your math er...BT.The current share price may be over 7 quid and above the strike prices for each years options. Except you won't be able to sell those shares at the current share price - you'll only be able to sell after the de-merger, and that price has been advertised as around about a fiver. The difference goes in the venture share which you can't sell and have no idea when or if you'll realise it (that the investment gamble).If you're leaving soon, why pay £6 quid to get something worth £5 quid - which you'll be forced to sell at the PA share next dealing period (5 minus 6 is minus 1) - of course, you get a venture lottery ticket. If you can pay £5 or less, that's a different matter...If you're in for the meduim term but might leave before the options would normally be exerciseable - then perhaps exercise. The share price is likely to be higher by the time you're forced to sell.But if you're in it for the long haul - you can exercise in a few years time, pay the lower rebased option price, and avoid the tax associated with exercising earlier.It really is a no brainer. Perhaps this is why PA's financial services practice always gets a slating on this site?!

It annoys me that PA need to go through all these hoops to mask the low pay rates that we get paid, particularly the deceiptful way they deduct employers National Insurance from the gross annual bonus.

well, some of it is. The reduction in value of PA share is reflected in a loan to Ventures so you own that interest bearing asset.

What is the best option then? Sell or exercise? Some contradictory views on this thread so far. Anyone any idea what the tax cost / rate will be if exercising now?

So what's the best course of action for someone with unvested options who reckons they might leave PA towards the end of the year?One of the options if I've read the forms properly is to buy out the options now i.e. pay for them, which would then leave me with actual PA Shares rather than options. The PA Shares would be replaced with new shares to reflect the new valuation of the company.If I then choose to leave, PA would have to buy the shares back off me at potentially a higher price - with the result I could make a bigger gain than by just exercising the options now.Can I actually do this? What are the downsides?

Exit Strategy: After the revaluation of the company the share price will go DOWN as a result of the transfer of capital to the venture business.You would therefore end up getting less back than you paid (eg strike price is 6, current share price is 7, share price after reval is 5). However you would get your LP shares in the venture fund (the "lottery ticket").I don't see there would be any income tax to pay, since you will effectively make a loss.So I guess it comes down to whether you think the venture company shares are worthwhile.

So, to summarise:Everyone should exercise the 2004 options.Some people should exercise the 2005 options, but pretty neutral if you roll (except if the lottery ticket is important to you or not).Everyone should roll the 2006 options.

you should roll over your 2004. Otherwise they get turned into pre-demerger shares. If you roll them over you will get an equivalence of consultng only shares. If there is a chance you will leave in the next 2 years you should exercise your 2006 and potentially 2005, so long as you can live with part of your updside being a loan to ventures + units in the fund.

This is all very complex. Why don't they just pay in something we all understand, i.e. cash?

Is the demerger, without which there would be no complexity. The options are there to incentivise long term performance. The communication of the demerger scheme and process has been awful though.

It says in the documents we were sent that you'll pay income tax at the different between the existing share price and the option price because the options are being exercised earlier than 3 years. From that you can work out what rate you are paying tax, and then how much you need the new share price to rise to make it worthwhile to exercise. I think you'll find its better to let each years options roll.You don't get these type of issues in public sector consulting do you?