Bain & Company
 | This article's lead section may be too short to adequately summarize the key points. (February 2010) |
| File:Bain & Company Official Logo 2010.jpg | |
| Company type | Incorporated Partnership |
|---|---|
| Industry | Management Consulting |
| Founded | 1973 |
| Headquarters | Boston, Massachusetts, U.S. 45 offices in 30 countries |
Key people | Orit Gadiesh, Chairman Steve Ellis, Worldwide Managing Director |
| Products | Management consulting services, including strategy, private equity, operations, mergers & acquisitions, technology and organization |
| Revenue | US$ 2.0 billion (est. 2007) |
Number of employees | 5,000 employees worldwide |
| Website | www.bain.com |
Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts, with offices in 27 countries. Bain is considered one of the most prestigious management consulting firms in the world[citation needed], and for eight consecutive years has been named the "Best Firm to Work For" by Consulting Magazine[1].
History
1970s
Bain & Company was established in 1973 by seven former partners from the Boston Consulting Group headed by Bill Bain.
Under Bain’s direction, the firm implemented a number of unconventional practices, by traditional consulting standards, in its early years. Notably, Bain would only work with one client per industry to avoid potential conflicts of interest[2]. Partners did not carry business cards and clients were referred to only in code names, further demonstrating its reputation for enforcing client confidentiality. And the company preferred to win work by boardroom referrals rather than marketing itself, sometimes landing clients by offering several weeks of work at no cost until proving the results of its services.[citation needed] Bain consultants preferred to work on increasing a company’s market value rather than simply handing clients a list of recommendations[3]. To win business, Bain showed clients the increase in stock price of Bain clients relative to the Dow Jones industrial average.[4]
The firm’s founding was followed by a period of growth in the late 1970s and early 1980s, and the firm opened offices in London, Munich, San Francisco and Tokyo.
Another innovative consulting approach that Bain pioneered was aligning its incentives with its clients’ results and occasionally taking equity in lieu of fees. An estimated 10% of revenue is from equity or success fees. This model proved successful for both Bain and its clients. For example, the firm took an ownership stake in fruit processor Del Monte Foods while working to revamp the company’s strategy.[5] "Coming into a leveraged buyout situation is never easy," says Del Monte CEO Richard Wolford. "Knowing Bain and their desire to deliver results, they probably would have provided ongoing support regardless. But the fact they own a stake doesn't hurt."[citation needed]
Bain & Company is an entirely separate company from Bain Capital, a private equity firm founded in 1984 by former Bain & Company Partners that included Mitt Romney (who would later become the 70th Governor of Massachusetts and a 2008 U.S. presidential candidate), T. Coleman Andrews III, and Eric Kriss.[4]
1980s
After a successful start, the company found itself facing a growing list of challenges in the late 1980s. In the midst of sluggish business conditions and overstaffing, Bain also faced the dilemma of having to turn away business due to its one-client-per-industry restriction. Competition increased as other firms copied Bain’s implementation-focused strategy.
However daunting these external challenges were, it was internal infighting that threatened to tear the firm apart. Bain was incorporated in 1985 and over the course of two years, the Employee Stock Ownership Plan (ESOP) was established, after which senior executives borrowed against their equity for cash, leaving the firm with a heavy load of debt[2].
As business slowed, the debt load began to squeeze the firm. Another issue which significantly dented the firm's reputation was its central involvement in the UK's largest financial scandal of that decade - the fraudulent takeover of Guinness by United Distillers - the managing partner Olivier Roux was indicted having masterminded the deal.[6]
As business continued to slow, Bain ultimately found itself in non compliance with Bank of New England loan covenants. The resulting write off of debt at Bank of New England resulted in that bank's failure.
1990s to present
Facing financial duress, Bain Capital partner Mitt Romney was asked to rejoin the firm as interim CEO. Bringing along two lieutenants from Bain Capital, Romney began traveling to all the Bain offices to rally employees.
The Boston Globe points out that “Over several weeks, Romney managed negotiations with the banks and among the partners,” and that “The moment came when negotiations produced a package in which [Bill] Bain and the founding partners would give up control of the firm, turning back $30 million they had taken from the ESOP and $100 million in notes they held against the firm.”
Romney’s plan involved "a complicated restructuring of the firm’s stock-ownership plan, real-estate deals, bank loans, and money still owed to partners"[7]. To avoid the financial crisis that a buyout would have triggered, the group of founding partners agreed to return about $100M cash and forgive outstanding debt.[3].
Although in the role for just one year before returning to Bain Capital, Romney’s work had three profound impacts on the firm. First, ownership was officially shifted from the owners to the firm’s 70 general partners. Second, transparency in the firm’s finances increased dramatically (e.g., partners were able to know each other’s salaries[7]). And finally, Bill Bain relinquished ownership in the firm that carried his name.
Within a year, Bain bounced back to profitability without major partner defections[7], and the groundwork was laid for a period of steady growth. In 1993 the head position was split into two roles – a Managing Director and a “non-executive” chairman of the board. Orit Gadiesh, named Bain’s first chairman in 1993, was fundamental in maintaining Bain’s culture. After spending two years in military intelligence for the Israeli army and earning a degree in psychology from Hebrew University, Gadiesh enrolled in the Harvard Business School and graduated as a Baker Scholar. As a junior partner during the turnaround she had been instrumental in keeping senior partners from leaving the firm, and as chairman she became the first female to lead one of the major consulting firms. Gadiesh was known throughout the firm for her passionate leadership and "True North" philosophy, which the firm still embraces. For the past several years, she has landed among Forbes' list of the "100 Most Powerful Women in Business" and is on the board of several organizations, including the World Economic Forum[3].
Under Gadiesh and MD Tom Tierney, Bain simultaneously loosened its restrictions around the one-client-per-industry policy, by assuring clients that the firm's strict internal Professional Standards prohibited the circulation of client data internally, and expanded its presence worldwide throughout the 1990s. The firm grew by 25 percent per year, expanded its number of offices from 12 to 26, and increased partnership from about 70 to nearly 200[3].
In 1997, the consulting firm Value Partners brought a suit against Bain regarding the defection of its Brazilian partners and office. The case went to trial in federal court in Boston. After a five-week trial, the jury found Bain liable for unfair competition and tortious interference, and awarded Value Partners $10 million in compensatory damages (the full award requested). The trial court, after awarding another $2.5 million of interest, denied all of Bain’s post-trial motions.
The 2000s began with Bain guiding its clients through the “New Economy” of e-commerce. The collapse of the dotcom, coupled with a general slowdown in the economy as had been faced in the early 1990s. The slowdown was painful on all of the major consulting players; however, Bain’s previous experiences with contraction left the firm zealous in avoiding layoffs. The firm weathered the economic downturn and emerged from it in a position of strength by investing in its leadership ranks with internal promotions and key external hires. Subsequently, the economic recovery has been followed by another period of sustained growth. In 2007, the firm expanded its number of worldwide offices to 37, with the opening of offices in Kiev, Moscow, Helsinki, and Frankfurt in Europe, and worldwide consulting staff increased to approximately 2,700.
The new millennium also brought changes to Bain’s traditional “generalist” approach to solving clients’ business issues. The firm developed areas of specialization with its deep industry “Practice Areas” in order to better serve the varying needs of its increasingly diverse multinational and local client base. Through targeted industry hires, Bain added industry experts to each of these new Practice Areas, significantly raising its profile in fields such as Financial Services, Healthcare, IT and Media and Entertainment industries.
Offices
North America
South America
Europe
Africa & Middle East
Asia & Oceania
Competitors
Four primary competitors provide strategy services to Fortune 500 entities: The Boston Consulting Group (BCG), Bain & Company (Bain), Booz & Company, formerly Booz Allen Hamilton's Global Commercial Market Business (Booz), and McKinsey & Company (McKinsey).[8]
Recruiting
In a Financial Times interview, Bain partner Bill Neuenfeldt identified the desired qualities in potential hires as “intelligence, integrity, passion and the ambition to make a difference.”[9] In addition to these basic requirements, an entry-level "associate consultant" is typically a recent college graduate with an enthusiasm for problem solving and an analytical skill-set. No specific major is required, though a demonstrated interest in economics and business can be valuable. The AC role lasts for twenty-four months, after which most ACs are promoted to the senior associate consultant (SAC) role. An SAC may have the opportunity to spend six months in a Bain office of his/her choosing, leave Bain for six months to work for another company or non-profit organization, or take two months for personal pursuits. After three years at Bain, many SACs will either leave Bain to attend graduate school or join another company. (Bain often offers to pay for business school for high-performing SACs.) Some will choose to stay on for a fourth year and outstanding SACs may be promoted directly to Consultant, the post-MBA position.
Bain is innovative in that they recruit online via podcasts and Second Life, which includes a “virtual recruitment center," complete with networking areas, auditorium and information stands where visitors can watch videos and slide shows and download information.”[10]
Notable current and former employees
 |
Business
- Bill Bain — founder of Bain & Company
- Joshua Bekenstein — MD, Bain Capital Board Member of Yale School of Management
- Greg Brenneman — Former CEO of Quiznos, Former CEO of Burger King, Former President of Continental Airlines, Former CEO of PWC Consulting and Board Member of The Home Depot and Automatic Data Processing
- Kenneth Chenault — CEO of American Express and the third African-American CEO of a Fortune 500 company
- Scott Cook — founder of Intuit
- Gary Crittenden — Served as the CFO of Citigroup, Monsanto and Sears, and currently presides on the Boards of Staples and TJX Companies
- Pete Dawkins — Former CEO of Primerica Financial Services and Heisman Trophy winner, Rhodes Scholar, U.S. Army Brigadier General, and Republican candidate for U.S. Senate.
- John Donahoe — Current CEO of eBay and Trustee for Dartmouth College
- Anne Glover — co-founder of Amadeus Capital Partners
- Steve Jurvetson — General Partner of Draper Fisher Jurvetson
- Jonathan Kraft — president of the New England Patriots
- Eric Kriss — co-founder of Bain Capital
- Jane Mendillo — President & CEO, Harvard Management Company
- Vivek Paul — Partner at TPG (Texas Pacific Group) and former CEO of Wipro
- Kevin Rollins — former CEO of Dell, Inc.
- Meg Whitman — former CEO of eBay and 2010 candidate for California Governor
- Crawford Gillies - Chairman of Scottish Enterprise, Non-Executive Director of Standard Life
Politics and public service
- Robin Buchanan — Former Dean and now President of London Business School
- Mitt Romney — Governor of Massachusetts (2003–2007), co-founder of Bain Capital, 2008 presidential candidate
- David Nahmias - Associate Justice of the Supreme Court of Georgia (U.S. state)
Other
- Roger H. Brown — president of the Berklee College of Music
- Michael Kolowich — internet content pioneer (founder of ZDNet, AT&T New Media) and documentary filmmaker
- Michael Murphy — former Olympic diver
- Jonathan Reckford — CEO, Habitat for Humanity
- Fred Reichheld — business writer
- Suzy Welch — former editor of the Harvard Business Review
Notes
- ^ Consulting Magazine: http://consultingmag.com/article/ART649699?C=1YQCevhKmgCfMuGP
- ^ a b Naficy, Mariam. "The Fast Track", 1997.
- ^ a b c d Sweeney, Jack. "Raising Bain." [1] Consulting Magazine, retrieved May 21, 2007.
- ^ a b "Counselor To The King," [2] New York Times, September 24, 1989 (retrieved December 13, 2007)
- ^ Del Monte Foods S-1 Registration [3] July 24, 1998 (retrieved December 13, 2007)
- ^ money.cnn.com
- ^ a b c Rees, Matthew. "Mister Powerpoint Goes to Washington".[4] American.com, retrieved May 21, 2007.
- ^ http://books.google.com/books?id=6zg1yGGKTT0C&pg=PA5&lpg=PA5&dq=%22booz+and+mckinsey%22&source=bl&ots=3egFXR1MX3&sig=J6vRx3b1-h3OyimxDubc8S9rVQQ&hl=en&ei=Y8auS_2vLMKclgfomemRAQ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CBEQ6AEwAw#v=onepage&q=%22booz%20and%20mckinsey%22&f=false
- ^ "Ask the experts: MBAs," [5] FT.com, January 26, 2007 (retrieved December 12, 2007)
- ^ "A Job Interview You Don't Have to Show Up For," [6] The Wall Street Journal, June 20, 2007 (retrieved December 12, 2007)
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