Consultant, advise yourself – Monitor bankrupt, bought by Deloitte

It’s caused more interest on the other side of the Atlantic perhaps, but the fall into bankruptcy of Monitor, the consulting firm (not the National Health Service regulator) is a fascinating story. They (or their assets) have basically been acquired by Deloitte;

To help facilitate this proposed transaction and preserve the firm’s considerable value as a going concern, the assets will be sold by means of a court-approved sale under Section 363 of the U.S. Bankruptcy Code.

Jason Busch has written about it extensively this week, on Spend Matters US and our PRO subscription site.  Do read his material (here, here, and here) on the public site if you’re interested – and more on PRO.

I’m also going to be thinking about any further lessons in the context of my long-standing interest in professional service procurement, of course, he said, taking yet another opportunity to promote this wonderful book....

But just the key details today. Monitor was founded in 1983 by Michael Porter no less (competitive advantage / five forces guru) and other Harvard academics. They positioned themselves right at the top of the strategic consulting hierarchy, with a particular expertise in “scenario planning”.

Cue a lot of bad taste jokes about not doing very good planning on their own scenario! The other factor in their downfall may be their close – too close, in most eyes – relationship with Libya and the late Muammar Gaddafi. The firm took on a contract to represent Gaddafi in a positive light between 2006 and 2008, and undoubtedly this wasn’t good for their reputation as things went downhill in terms of the West’s relationship with him.

What seems incredible in the Monitor case is that it got to this point – labour is by far the biggest cost line for professional service firms, so usually if business takes a downturn, we see rapid redundancies to get the cost base in line with income again. Whether Monitor thought things would pick up, I don’t know, but to be brought down ultimately by the rental bill for their office in Cambridge Massachusetts seems incredible. (There is a parallel of sorts however – the North-West UK law firm Halliwells went out of business in 2010, with the costs of an expensive new office partly blamed for their downfall. )

So, a few questions to take from this. If Monitor aren’t too big / too high-powered to fail, who else might be vulnerable in the professional services world? Have Deloitte got a good deal? How serious is the potential reputational risk for anyone in terms of who you do business with?

And do check out Jason’s articles for a more in-depth analysis, including part 1 of his fascinating interview with Jeremy Hildreth, an old friend of his who has experience of working with the Libyans as well....

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