Yes, management consulting firms go bankrupt. The Monitor Group filed for bankruptcy and will be acquired by Deloitte Consulting. Monitor was a top-shelf strategy consulting firm often mentioned in the same league as the big 3 (McKinsey, Bain, BCG) and other boutique strategy firms. It was the type of firm that MBAs aspired to work for. The Vault ranked Monitor #9 in prestige and #11 overall among all global consulting firms here.
Monitor had pedigree. It was founded in 1983 by several entrepreneurs closely related with Harvard, including the uber-famous professor Michael Porter. You can see some online hecklers here mention that the firm should have used Porter’s famous “five forces” analysis to prevent the bankruptcy.
Monitor had reach. According to its website, it has 1,200 employees globally and more than 25 globally offices. Its alumni were thought-leaders and wrote 80+ Harvard Business Review articles (see the HBS connection?).
Monitor made some bad decisions. More details here, but there was some controversy recently, as it became apparent that this high-end strategy firm received a $3M annual retainer from Libya’s ex-dictator Qaddafi for consulting and public relations work. He hired Monitor to help improve his international image. How strange is that?
Monitor lost its focus. The Economist notes here that Monitor expanded into new areas and created an expensive infrastructure that could not be support by its revenues. When the downturn came in 2008, corporations cut back on their pure-play strategy engagements and Monitor started losing money. The other strategy firms have been expanding into more operational areas for some time (e.g., McKinsey with IT and operational improvement), but it seems like Monitor was slow to adopt that approach.
What’s next? Apparently, there will be some lay-offs, but Deloitte Consulting will pick up most of the staff. Judging from the employee reviews at www.glassdoor.com, it was as good place to work, lots of smart and passionate people. Looks like it could be a win for Deloitte, which grew 8%+ last year overall (including, Audit, Tax etc) to $31 billion in revenues according to this press release.
Professor Michael Porter looking a little stressed.
Source: Economist / Getty Images
Post-script: Good article in Consulting Times here that talks about the challenges of integrating a strong niche brand (Monitor) with a broader brand (Deloitte).