PwC has agreed to buy the independent management consultant Booz & Company in the latest sign that struggling mid-tier firms are being forced to make radical choices to survive.

Neither group would disclose the value of the transaction, though it is understood to be worth at least the $1bn that Booz makes in annual revenues, according to people familiar with the agreement.

The two groups said they had signed a conditional merger agreement which was subject to approval by Booz’s 300 partners, who will vote in December.

Medium-sized consulting firms including Booz have struggled to compete with bigger rivals such as McKinsey and Bain & Co since the financial crisis, with most clients demanding advisers with global scale or niche specialisms.

PwC, one of the big four professional services firms with $32bn in annual revenues last year, had been talking about a potential link-up with Booz for nine months, but other companies, including Accenture, had also expressed an interest.

Partners at Germany’s Roland Berger, another strategy consultant, have also been considering whether their firm has an independent future.

“By merging with Booz & Co, PwC has gone for the biggest available prize as McKinsey and BCG are viewed as too big to merge with or acquire, Bain is too specialised, and Roland Berger is out of the equation,” said Fiona Czerniawska, managing director of Source, an independent research company specialising in management consulting. “This may prove to be a smart move if, as we expect, the other big four firms follow suit.”

Booz, which was founded by Edwin Booz in 1914, will give up its name and trade under the PwC umbrella if the deal is completed. Its 300 partners, who are part of a workforce of 3,000, will join PwC’s advisory practice, which has revenues of $9bn. Their experience in strategic advice should boost the bigger group’s strategy practice, which has 130 partners.

Dennis Nally, chairman of PwC International, said the combination would give the group the opportunity to “provide services from strategy development right through to execution”.

Cesare Mainardi, chief executive of Booz, who has been leading the merger talks, said the combined group would “help reinvent management consulting for the next century”.

Consulting deals have a chequered history, however, because of the potential for culture clashes. In 2010, talks between Deloitte and Roland Berger collapsed after the partners at the German group decided to go it alone. Merger talks between Booz and AT Kearney, another management consultant, also failed to bear fruit in 2010. But this year, Deloitte bought Monitor, the strategy house co-founded by Michael Porter, the Harvard management expert, out of bankruptcy.

“One of the main reasons why PwC is merging with a strategy firm is the pressure to do large-scale transformation projects which means that consulting firms need to field an increasingly wide range of resources, from strategy through to technology,” said Ms Czerniawska.

“However, what is very significant is the size of the potential deal as there are only a very small number of strategy firms big enough and/or have brands strong enough to have an impact on client perceptions, but this essentially propels PwC into the strategy space with Booz’s huge credibility.”

PwC was advised by Perella Weinberg and Booz by Morgan Stanley.

Additional reporting by Anousha Sakoui