| Topic Name: |
The situation at McKinsey, Bain & BCG |
| Message Name: |
What small boutiques charge PE firms in the UK and Europe |
| Date Posted: |
04/24/2003 |
| In Reply To: |
Clients actually disclose the rival offers quite often, although they usually just tell you the ballpark figures. But if the partner knows one of the clients very well and that particular person fells bad for not awarding the project to the partner, he'll talk! Think about it, it's to the clients' benefits if they can lowball you the next time, and it's no secret these days that all corporations are trying to "collude" to depress consulting prices. Go ask any partner, and he'll tell you that it's a lot more difficult to sell high-price consulting work these days. I don't know much about consulting for PE firms, but in the industry world, I can totally see how a $17K project is signed these days. I've been seeing my office doing work at a huge discount and in some instances, agreeing to only charge expenses to get in the door (may be that explains the $17K). I've also been seeing an effort to go for the "smaller fish", i.e., mid-market companies, because the "bigger fish" is not buying. I work in a big office so I guess it does mean something. Having said that, I personally find working for smaller clients a refreshing experience! |
| Message: |
In general for a pre exclusivity type review that is a few phone calls and some desk research that lasts for no more than a few days, prices start at about ??5K. For a strategic review of an acquisition target we charge from ??15K through to about ??100K, seldom more. These projects last from one week to a month or so.
I would think it is highly unlikely that McKinsey can charge over ??1m to do a strategic review of an acquisition target prior to the deal being completed. One cannot really add a success element to the fee structure on these assigments as this will cause the research to be biased and so the client has to pay up front - a substantial cost to bear if the deal fails.
Maybe on deals valued over ??500m McK can get away with charging ??1m but even then there will be fierce competiton. How many deals of that size are being done at present - not too many! That is why McK is targetting smaller clients and why our boutique is now targetting smaller clients than we normally do - because McK is lowering its sights.
Once a deal is done they might be able to charge that kind of money when doing a pure strategy assignment for the company under its new ownership.
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