{ "media_type": "text", "post_content": "Is Bain going to have the same fate post Covid as what happened to Booz & company Post 2008 crisis ?", "post_id": "5eb7a34eb2db13001c311228", "reply_count": 78, "vote_count": 14, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

Is Bain going to have the same fate post Covid as what happened to Booz & company Post 2008 crisis ?

likefunnysmart
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What’s going on at Bain? Booz had structural flaws (eg European partner liabilities) that the global partnership was unwilling to capitalize/fix. Also, no way anyone would pay a 3-4x sales multiple. More like 1x in consulting. Your assets can walk out the door on day 1

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Can you please elaborate what you mean by partner liabilities? Was it a few partners who were underperforming, yet were not being let go?

Lol... Bain’s financials are incredibly strong. If anything, we’re looking to buy someone. I don’t know if you noticed, Bain is the only firm that DOUBLED its intern class this summer during COVID. .... invest while others are weak.

likesmart

Was the decision to double the intake class taken before or after the covid outbreak? Impressively bullish if it was taken after the outbreak!

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KPMG’s golden opportunity... soon it will be MBKPMG 😂

likefunny

We will welcome them to the fam

likeuplifting

In the scenario if Bain is for sale, I think it’s just way to expensive for anyone to acquire it in this climate. Bain had a revenue of $4.5B and will trade at a multiple of 3-5x revenue which gives it a ballpark value of $13.5-22.5B. That is a huge price to pay for questionable value based on Monitor / Booz acquisitions which both suffered brand dilution and a talent exodus. Despite the fact that the the Big Four are hurting in this economy, they are also limited by audit independence restrictions which further drives down the the revenue synergies. The most likely candidate would then be Accenture but the economics are still contentious.

likeupliftingsmart

Consulting firms (and a number of other partnership-based professional services businesses) are typically done on a revenue basis given the model typically pays out most of the “profit” each year and thus a metric like EBITDA is much harder to nail down, requires lots of adjustments, and is more susceptible to manipulation for the benefit of valuation. For these specific types of firms revenue is a more reliable and more typical metric to use. As BCG2 noted, 1x revenue is the “standard” starting point for valuation here, but lots of other factors will go in as well. I doubt Bain Capital s for sale and if somehow the firm does transact I am confident it would be for more than 1x revenue, but can’t imagine a world where it would be the 3-5x mentioned, given that the assets are the people and retention bonuses only go so far to keep talent.

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BCG and Mckinsey would buy half each and split the name. The big 2: BCGB, Mckinsey and Company

likefunnysmart

C5, I capitalized the C in Company because now it’s important to say.

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KPMG’s chance to exist 😂😎

likefunny

PwC should spin off S& to Bain.

likefunny

Strategy& is and will carry on being a Booz legacy and a great firm to work for. We know we have had problems in the past but we have overcome them successfully. The next 5 years will show our true mettle.

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Well well well 😂😂

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funnylike

We bought Ernest and Young consulting for 11 billion almost 20 years ago. That’s why they are just auditors as far as I know now. We dropped the name shortly after, probably a mistake. We’re still buying a few companies per year. Honestly Cap is probably the biggest consulting firm you’ve never heard of. I had no idea. The purchase would make more sense for us.

likesmart

It was before my time. I heard the story different when I worked at Accenture. The story told to us is they were put out of business due to the Enron scandal. They were no longer allowed to do auditing as a company. So they went toward technology consulting and changed their name to Accenture. That story was probably told second hand. It’s good to get the real story.

Picture an Analyst coming from a family so rich that he or she could buyout Bain. Now all your seniors are now your employees.

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&Bain has a certain ring to it 🤣😂🤣😂

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Swearing in your name is one way to get noticed

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@Strategy&, Nothing that would suggest we need to be bought in the near term. Company’s financial position is strong, as is the client pipeline

likesmart

Strategy&Bain

likeuplifting

No instead of PwC, ACN will buy. Different fate.

funny

C2 is spot on. Too many independence and price tag issues for a B4 to pull it off, a publicly traded firm with a big balance sheet might do it tho.

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😏

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What are the indications / signs Bain is in more trouble than others?

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Bain&Pizza

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already being discussed.

C2 is right, if anyone were to acquire, it would likely be ACN

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