Financial Times article and a blog post response on use of management consultants during the downturn to help improve execution at portfolio companies.

My favorite section:

“There is a mentality among many young MBA types who think that since they know all of the tricks Excel has to offer, then surely they can engineer ways for a company to be profitable.  Many of these folks worked in the investment banking industry, where they lived in a 5 by 5 foot cubicle for five years going blind from looking at computer screens as they were building various types of valuation and pro forma financial models.  What many of these people failed to learn (and what b-school didn’t teach them to do, because you can’t learn it in a classroom), however, was how to manage and grow a business once you’ve made the investment in it.”

Classic. Another great moment in the Bankers vs Consultants debate.

The quick summary is that you’ll always need bankers to run your deals but in tough times you need someone with actual management experience/skill to extract value from your portfolio companies or you’re toast. (Note: You should be doing this in good times also, but when you’re drowning in cash like Scrooge McDuck, no one bothers, the same way that investment banks don’t bother to manage their own expenses during booms)

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