Bailout Watch 496: PTFOA Pays Boston Group $8 Million to Laugh at ChryCo – Fiat Deal
Did I say laugh? I meant to say “analyze.” As in pore over spreadsheets, crunch numbers, make projections, hold meetings, exchange emails, examine market trends and fill out endless time sheets and expense reports. I imagine that TTAC’s Best and Brightest could save the Presidential Task Force on Automobiles (PTFOA) some money; how much does it cost to make up a rubber stamp that says “FUHGEDDABOUTIT”? So, anyway, Bloomberg winkled-out the payment from the PTFOA to The Boston Consulting Group. “‘A very significant portion’ of work will be to analyze GM’s restructuring plan and Chrysler’s proposed alliance with Fiat SpA, according to the notice posted on FedBizOpps.gov. Boston Consulting must work with the Treasury Department and GM to craft a ‘financial plan acceptable to the government.'” Meanwhile, LinkedIn profiles PTFOA chief Steve Rattner’s former employer, Quadrangle Group. And wouldn’t you know it: “Quadrangle Group employees are most connected to:” Lazard (hired by the United Auto Workers to investigate GM’s finances in 2005; and by Chrysler last August to sell the Viper model as a business), JPMorgan (big time Chrysler debt holders and bailout recipients) and The Boston Consulting Group. Click on BCG, and “The Boston Consulting Group employees are most connected to:” McKinsey and Company. Whose clients include GM and Ford. Small word. Big bill. Yours.
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Yes it is a small world ... there are only a few world class consulting groups and they do have interconnecting relationships with many major corporations, so there are going to be connections like that. You HAVE heard of McKinsey & Co. before, right? Is anyone in the S&P 500 NOT their client at some point? OTOH, $8 million dollars sure is a lot for that kind of work, and it's absolutely nothing but human labor and bit of travel expense. Think I'll send a resume to BCG!
Kevin, I never realized it, but there is likely some very interesting info to be found analyzing that site. It's not unusual for a consulting group to be linked to all sorts of people, but who is MOST linked to whom is quite telling. Hopefully, this will result in people putting less info into that horrid site. I hate the thing.
As someone who works in consulting - at a McK spin-off - I think you really would not want to make the decision of working for any of the big firms so lightly. What they charge and what you will get will be totally unrelated. The model from an employee's PoW is that 1 in 100 makes it to partner, at which point you start earning more than the work you put in. 99 will not make it - this means being thrown out, rather than staying at the same position and not progressing. For the ones, who do get thrown out, the good ones end up at clients of those consultancies, which is actively encouraged - as they will sing the praises of their ex-employer and hire them in the future. So far, so ordinary. And as stated, rare is the Fortune 1000 company, which does not employ at least one of the big consultancies. As for quality, it ranges even in the top flight firms from pretty basic, to truly inspired. It takes a bit of luck, good relationships within the consulting firm (so you do not get some junior numbnuts), and a very well-versed client, preferably an ex-consultant themselves, so they at least know what they are getting and how to guide the process to get the most out of it. 8 million might sound a lot and I guess if they do their job right, the margin will be around 70%. On the other hand some of that is eaten up by the enormous expense generated in acquiring projects, and the argument the companies make is how much money they made / saved yo by the project - the advertised ratio usually being 4 times the project expense, not how much you pay upfront. And in a potential $100 billion investment 8 million is small fry.
Kristjan, Well said!