Consulting firms as an investment banking coverage sector
It seems that the consulting and management consulting space is an underserved industry category by investment banks and M&A advisory firms (especially in the LMM).
Am I missing something here? Are there firms that have a focus on this space or is there not a lot of focus there for a reason?
Based on the most helpful WSO content, the consulting and management consulting space is indeed not a heavily targeted sector by investment banks, particularly in the lower middle market (LMM). This could be due to several reasons:
Nature of the Industry: Consulting firms often have less tangible assets and are more service-oriented, which can make them less attractive for traditional M&A activity compared to industries with more physical or financial assets.
Fragmentation: The consulting industry, especially in the LMM, is highly fragmented with many small players. This can make it challenging to find sizable deals that justify the effort and cost of M&A advisory services.
Specialized Focus: While the space may not be a primary focus for many banks, there are niche firms or boutique investment banks that may specialize in professional services, including consulting. These firms might have expertise in valuing service-based businesses and understanding the unique dynamics of the consulting industry.
Demand for M&A: The demand for M&A in the consulting space might not be as high as in other industries. Consulting firms often grow organically or through smaller, strategic acquisitions rather than large-scale M&A transactions.
If you're looking for firms with a focus on this space, it might be worth exploring boutique investment banks or advisory firms that specialize in professional services or have experience in the consulting sector. Additionally, networking with industry professionals and leveraging platforms like LinkedIn to identify firms with relevant expertise could be helpful.
Sources: How to tell the prestige of LMM or MM PE firms?, Q&A: Consulting v. Banking, the age old question. By Former MBB and Bulge Bracket Banker., Lazard vs. Morgan Stanley?, Q&A: Big4 Consulting to Private Equity, now M7 MBA, Why do MBAs seem to favor consulting over banking nowadays?
Usually comes under Business Services (sometimes within Industrials). Shops like Houlihan, DC, Lincoln, Big 4 have solid MM creds with the most BB dominating as per usual (see goldman and jp md movement recently)
Guggenheim and William Blair dominate the sector in MM and UMM, loosely defined as $500M - $5B (where most of the scaled assets are). Jefferies a distant third. Analyst above might be talking about LMM consultancies (less than 50 people) because those shops aren’t seen on too many notable deals in the space.
Depends on the bank, Seth Bergstein was the guy for consulting and business services at MS, i think he is at EVR now under the tech umbrella
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