Why does PE keep paying consultants?
I'm coming from the consulting side and I'm trying to understand why MF PE regularly pay MBB PEG/PIPE/PEPI consulting teams for their commercial due diligence instead of just building out their own teams and doing it in-house.
I assume they're doing enough DDs to keep the team busy, and they could use the money they save on fees to poach MBB guys so hiring the right people shouldn't be hard.
I understand why smaller funds wouldn't do this, but if you're Blackstone or KKR surely this would make sense?
Would love to hear from any PE guys or consulting guys that can tell me what I'm missing.
DD fees come out of fund expenses paid by LPs while personnel cost comes out of the mgmt company. PE people are very expensive so you couldn’t get a big team anyway to service all DDs you have ongoing. Market intel as they speak to everyone. Some perceived expertise as they might’ve done work for a business you’re trying to buy previously so they know mgmt / know it from the inside. Some semblance of ‘independence’ for buyers. Etc.
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