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1. For big deals (over $1B), they almost always use Bain (80% of all transactions). For smaller or more straightforward deals, they will consider other firms at a lower price
2. Yes, Bain’s CDDs are better than the other MBBs and significantly better than everyone else. The biggest advantage is that whenever a new asset goes on the market, we very likely have already diligenced it last time it sold (probably for multiple PE firms). This allows us to go extremely deep on the asset in a very short amount of time
B1 basically brings in that 80% of $1B transactions! Stop gatekeeping! Share some w McK and FTI
1. LEK does CDDs for just about every PE firm, but only a small share (likely <10%) of CDDs are performed by LEK. % drops drastically as you go upmarket (you’re much more likely to hire MBB for >$1B transactions).
2. No material difference among MBB on core capabilities - yes, material differences in terms of sector expertise. You’re much more likely to go to McK or BCG for CDDs in healthcare and pharma as an example.
^ this part
Chief
Just because I slum it at a roadside taco truck today, doesn’t mean I won’t go to The French Laundry tomorrow.
Concur with M1. Additionally, people swap firms all the time. You typically get the same deliverable quality. You can even get the same people, employed by different firms, over the course of time.
My recent impression in general is that LEK treats DD work differently from MBB - it’s much more algorithmic/industrialized? A CDD at McK isn’t THAT materially different from a conventional strategy study.
I'm at a mid-cap and we'll use Bain for larger deals, but for the rest we'll go off of price and/or who we've liked working with before.
Rising Star
I do a couple buyside CDDs in the $1-5B range each year and they're not that different than the ones I do for $200M, I assume some are different but the ones I see are what I'd consider "typical"
No, it's generally because we are willing to spend more and they can provide shorter turnarounds than other timelines. Quality from my experience hasn't been different though across MBB/T2
EYP also does mega cap and MM. From my convo with Partner, he said it was more PE Deal Team dependent than firm so really comes down to who they have relationship with or who last diligenced the asset when it hit market or similar comp.
CDD’s seem to have been commoditized and seems like there is plenty to go around when market is good. My question is if there are any firms in particular that are differentiators for value creation or has this been somewhat commoditized as well? As someone entering market out of mba I would think VC involves more strategy and deep expertise than solely market studies.
I mean, mgmt consulting broadly is commoditized. If anything, there are clear benefits of MBB scale for CDD work.
Rising Star
I've literally never seen LEK in a competitive bid or as an incumbent. I'm guessing they either don't do TMT or they're the low cost provider that ppl use on small speculative deals.