Bain & Company

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Bain & Company

Type

Incorporated partnership

Industry

Management consulting

Founded

1973

Headquarters

Boston, Massachusetts, U.S.

Orit Gadiesh Key people

(Chairman of the Board)

Bob Bechek
(Worldwide Managing Director-elect)

Products

Management consulting services

Revenue

$2.0 billion (est. 2007)

Employees

5,500 employees worldwide

Website

www.bain.com

Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts. Bain has 47 offices in 30 countries[1] and more than 5,500 employees. It is

considered one of the most prestigious consulting firms in the world,[2] ranks first on the Vault Consulting 50,[3] and has been named the Best Firm to Work For by Consulting Magazine for nine consecutive years.[4]

Contents
[hide]

1 History o 1.1 1970s o 1.2 1980s o 1.3 1990s o 1.4 2000s 2 Notable controversies o 2.1 Guinness affair 2.1.1 Sir Jack Lyons and "the Guinness Four" o 2.2 Value Partners case 2.2.1 Background 2.2.2 Post-trial outcome 3 Relationship with Bain Capital 4 Competitors 5 Recruitment and professional advancement o 5.1 Recruitment o 5.2 Professional advancement 6 Notable current and former employees o 6.1 Industry and finance o 6.2 Politics and public service o 6.3 Other notable people 7 Notes 8 External links

[edit] History
[edit] 1970s
Bain & Company was established in 1973 by a group of seven former partners and managers from the Boston Consulting Group headed by Bill Bain. The company was originally headquartered in Lexington, Massachusetts on Militia Drive. By the end of the decade, the firm's headquarters were in Faneuil Hall Marketplace in downtown Boston. Under Bains direction, the firm implemented a number of unconventional practices in its early years. Notably, Bain & Co. would only work with one client per industry to avoid potential conflicts of interest.[5] Partners did not carry business cards and clients were referred to by code names, further demonstrating its reputation for enforcing client confidentiality. 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. Bain consultants preferred to work on increasing a company's market value rather than simply handing clients a list of recommendations.[6] To win business, Bain

demonstrated the increase in stock price of Bain's clients relative to the Dow Jones Industrial Average.[7] The firm's founding was followed by a period of growth in the late 1970s and early 1980s as the firm opened offices in Menlo Park, California, London, Munich, Paris and Tokyo. Another innovative consulting approach that Bain & Co. pioneered was aligning its incentives with its clients' performance by occasionally accepting equity in lieu of fixed fees. An estimated 10% of Bain's revenue is derived from this equity participation or "success fees". This model has 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 companys strategy.[8] "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."

[edit] 1980s
After a successful start, Bain & Co. 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 Bains implementation-focused strategy. However daunting these external challenges, it was internal infighting among the senior partnership that threatened to tear the firm apart. In response, Bain & Co. was formally incorporated in 1985 and, over the course of two years, an Employee Stock Ownership Plan (ESOP) was established. Bain's senior partners began borrowing against their equity for cash, eventually leaving the firm with a heavy debt load.[5] As business slowed, this debt load began to squeeze the firm. Bain ultimately found itself in non-compliance with Bank of New England loan covenants. The resulting debt write-off at the Bank of New England eventually resulted in that bank's failure in 1991.[9]

[edit] 1990s
Facing financial duress, Bain Capital partner Mitt Romney was asked to rejoin and lead Bain & Co. as interim CEO. Bringing along two lieutenants from Bain Capital, Romney began a traveling campaign to rally employees at all Bain offices globally. Romney also negotiated a complex settlement between the Bain partnership and the firm's lenders, including a $10 million reduction in the $38 million Bain owed the Bank of New England,[10] which by that time had been seized by the FDIC and placed in Chapter 7 liquidation. The Boston Globe pointed out that: "Over several weeks, Romney managed negotiations with the banks and among the partners... 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." Romneys plan involved "a complicated restructuring of the firm's stock-ownership plan, realestate holdings, bank loans, and money still owed to partners".[11] 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.[6] 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[11]). Third, Bill Bain relinquished ownership in the firm that carried his name.

Orit Gadiesh at the World Economic Forum in Davos, Switzerland, 2007. Within a year, Bain bounced back to profitability without major partner defections,[11] and the groundwork was laid for a period of steady growth. In 1993, the head position was split into two roles an executive head (Worldwide Managing Director) and a non-executive head (Chairman of the Board). Orit Gadiesh, named Bains first Chairman in 1993, was fundamental in maintaining Bains 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; 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.[6] 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 office count from 12 to 26, and increased partnership from about 70 to nearly 200.[6]

[edit] 2000s
The new millennium began with Bain & Co. guiding its clients through managing the changes involved in the "New Economy". The economic slowdown following the dotcom boom was painful on all the major consulting players; however, Bains previous experiences with contraction left the firm zealous in avoiding layoffs. The firm weathered the economic downturn 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 global footprint to 37 offices, with office openings in

Kiev, Moscow, Helsinki, and Frankfurt. The worldwide consulting headcount increased to approximately 2,700. Bain now has more offices in Europe than in any other region; the upshot of which being more revenue comes from its Continental operations than either the North American or Asian markets. The new millennium also brought changes to Bain's traditional generalist approach to solving client issues. Due to increasing specialization in the consulting industry, the firm developed niche "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 "Practice Areas", significantly raising its profile in fields such as financial services, healthcare, information technology and media/entertainment.

[edit] Notable controversies

[edit] Guinness affair
The Guinness share-trading fraud was a corporate takeover scandal of the 1980s. In April 1986, the British government launched an investigation into Guinness' purchase of Distillers Company for equity valued at $3.8 billion. The government suspected that Guinness had illegally inflated its stock price to sway Distillers' shareholders away from a competing offer from the Argyll Group, a Scottish food retailer. Several executives were implicated in the investigation: the Guinness CEO Ernest Saunders, several top executives at Morgan Grenfell (Guinness's investment bank), and Guinness' director of financial strategy & development and then Bain VP Olivier Roux (who had temporarily been assigned to Guinness by Bain). Roux was still on Bain's payroll at the time, prompting public criticism that Bain was guilty of a conflict of interest and leaving Bain vulnerable to lawsuits. Roux later resigned his posts at both Guinness and Bain.[12] [edit] Sir Jack Lyons and "the Guinness Four" Sir Jack Lyons, whom Bain hired to help build its consulting practice in Britain, admitted to receiving more than $3 million in fees from Guinness for "advisory services". His company, J. Lyons Chamberlayne, was also under investigation for accepting another $480,000 from Guinness linked to improper share buying. Bain fired Lyons in January 1987; he was later charged (along with Ernest Saunders, Gerald Ronson, and Anthony Parnes). The four men became known as "the Guinness Four." All men were convicted but Lyons was not imprisoned due to ill health. He lost his knighthood and was fined 3,000,000 plus 1,000,000 prosecution costs.[13] Due to Roux's resignation and Lyon's swift termination, Bain & Co. was never accused of any wrongdoing in the Guinness affair.

[edit] Value Partners case

[edit] Background In 1998, Value Partners, a smaller management consulting firm based in Milan, filed a lawsuit in U.S. federal court against Bain & Co., alleging Bain's theft of Value Partners' office in So

Paulo, Brazil, including its clients, employees, and confidential and proprietary information.[14] Value Partners, which was established in 1993, had expanded its operations to five offices worldwide with 80 professionals. In 1994, Value Partners opened an office in So Paulo, Brazil. By 1997, Value Partners' Brazilian office was thriving and had grown to 25 professionals.[14] Value Partners claimed that Bain unlawfully caused members of Value Partners So Paulo office to enter into a conspiracy with Bain to take-over Value Partners' Brazilian office. Bain, which at the time had no business presence in Brazil, allegedly determined that it thereby could expand into the region, without incurring the associated start-up costs and risks of a new branch office.[14] According to the complaint, unbeknownst to fellow members of Value Partners at the time, the co-conspirators remained with Value Partners even after agreeing to join Bain, so as to secretly work from within Value Partners to better effectuate the wholesale misappropriation of Value Partners' So Paulo office.[14] [edit] Post-trial outcome In 2002 following a four-week trial, the jury found Bain liable for unfair competition and tortious interference under Brazilian law and awarded Value Partners $10 million in compensatory damages (the full award requested by Value Partners at trial). Value Partners was also awarded approximately $2.5 million in prejudgment interest.[15] Bain's post-trial motions were denied, and Bain appealed to the First Circuit U.S. Court of Appeals. Value Partners filed a cross-appeal, contesting the District Court's denial of its companion claim for treble damages for unfair competition under Massachusetts law.[15]

[edit] Relationship with Bain Capital

In spite of popular belief, Bain & Co. is an entirely separate entity from Bain Capital. Bain Capital is a private investment firm specializing in private equity (PE), public equity, leveraged debt asset, venture capital, and absolute return investments. Bain Capital does not provide management consulting services to its clients.[16] Bain Capital was founded in 1984 by several former Bain & Co. partners that include Mitt Romney (later to become the 70th Governor of Massachusetts), T. Coleman Andrews III, and Eric Kriss.[7] On account of these shared roots, Bain & Co. still maintains a strong institutional relationship with Bain Capital. Many current Bain Capital MD's and professional staffers began their business careers at Bain & Co.[17]

[edit] Competitors
Bain & Company is one of the market leaders in management consulting services to the Fortune 500 set, along with McKinsey & Company, The Boston Consulting Group, Booz & Company, A.T. Kearney, and Monitor Group. This top tier of consulting firms recruits young professionals from the world's most elite undergraduate and business schools. Also

increasingly, larger technology and implementation-focused firms such as Deloitte, Accenture, IBM, and Ernst & Young have been building out strategy groups to try to steal some share from the pure strategy consultancies. Although these three firms compete directly across all major sectors and geographies, each firm possesses its own unique profile that defines its sustainable competitive advantage in the marketplace. Having pioneered private equity (PE) consulting, Bain is the strongest player in the PE/LBO (Leveraged BuyOut) space, servicing most of the major private investment firms globally; Bain also displays competitive strength in the closely related mergers & acquisitions (M&A), organizational/turnaround and financial services consulting spaces. Geographically, Bain displays a strong market share in the Americas and Europe but is weak in Asia and other emerging markets. McKinsey & Co., on account of its experience, deep board/C-level relationships and scale, is currently the strongest player in the MBB tier with particular strongholds in general strategy, financial services, operations and IT (through its BTO subsidiary). McKinsey holds the highest market share among the four firms globally with geographic strength across the Americas, Europe and Asia. BCG displays competitive strength in general strategy and holds the second-highest market share globally after McKinsey.

[edit] Recruitment and professional advancement

[edit] Recruitment
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.[18] In addition to these basic job requirements, an entry-level Associate Consultant (AC) is typically a graduate from an elite undergraduate institution with a demonstrable enthusiasm for problem-solving and a basic analytical skill-set. No specific major is required for the AC role, though an academic background related to data-based analysis (e.g., economics, business, sciences or engineering) can be a value-add on the job.

[edit] Professional advancement

The Associate Consultant (AC) role typically lasts for 24 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 choice, leave Bain for six months to work for another company or non-profit organization, or take a two month sabbatical for purely personal pursuits. After 36 months at Bain, most SAC's either leave Bain to attend graduate school (top-performing SAC's may receive funding for graduate business studies) or join another company. Some SAC's choose to stay on for a fourth year; outstanding SAC's may be promoted directly to Consultant, the post-MBA position. Those individuals that choose to join Bain after completing their MBA or other professional/graduate training enter in the Consultant role, where they are tasked with planning and managing the analytical process that produces key insights for Bain's clients. Increasing responsibility over planning and managing this analytical process in the Consultant role leads to a Case Team Leader (CTL) role. Most CTL's leave Bain to pursue junior

management positions in industry or finance; some CTL's continue on to a Manager role at Bain. Managers are tasked with overseeing several inter-related analytical processes and are increasingly exposed to clients. Several years in the Manager role with demonstrated potential to build and manage client relationships may lead to a client-facing Principal role followed by election to Partner. As Bain & Co. is an incorporated partnership, each Partner holds an equity stake in the firm and may rise to Director (a senior partnership role) or Managing Director (an executive head of a country or region) depending upon their professional strengths and capacity to build/maintain high-level relationships.

[edit] Notable current and former employees

[edit] Industry and finance

Bill Bain Founder of Bain & Company Eric Kriss Co-founder of Bain Capital Stephen Pagliuca MD of Bain Capital; co-owner of the Boston Celtics Joshua Bekenstein MD of Bain Capital, board member of the Yale School of Management Kenneth Chenault CEO of American Express Gary Crittenden CFO of Citigroup, Monsanto and Sears; board member of Staples and TJX Companies Pete Dawkins Former CEO of Primerica Financial Services, U.S. Army Brigadier General and Republican candidate for U.S. Senate Kevin Rollins Former CEO of Dell Computer William F. Achtmeyer CEO of The Parthenon Group, Chairman of the Board of Overseers of Tuck School at Dartmouth Greg Brenneman Former CEO of PWC Consulting, Quiznos and Burger King; board member of The Home Depot and Automatic Data Processing John Donahoe CEO of eBay, Trustee of Dartmouth College Meg Whitman CEO of Hewlett Packard; former CEO of eBay; 2010 candidate for California Governor Vivek Paul Partner at Texas Pacific Group, former CEO of Wipro Mark Pincus Founder and CEO of Zynga Anne Glover Co-founder of Amadeus Capital Partners Steve Jurvetson General Partner of Draper Fisher Jurvetson Jane Mendillo President and CEO, Harvard Management Company Jonathan Kraft President of the New England Patriots Andy Wasynczuk Former COO and SVP of New England Patriots, Lecturer at the Harvard Business School

[edit] Politics and public service

Robin Buchanan Former Dean and President of London Business School The Lord Feldman of Elstree Chairman of the British Conservative Party Mitt Romney Former Governor of Massachusetts, co-founder of Bain Capital, 2012 potential Republican U.S. Presidential candidate

Jeffrey Zients Chief Performance Officer of the United States (2009-), former Acting Director of Office of Management and Budget (2010)

[edit] Other notable people

Roger H. Brown President of the Berklee College of Music Michael Kolowich Founder of ZDNet and AT&T New Media; documentary filmmaker Michael Murphy Former Olympic diver Fred Reichheld Business author Suzy Welch Former Editor of the Harvard Business Review Pat Manning Former Olympic rower

[edit] Notes
1. 2. ^ "Worldwide offices". Bain & Company. http://www.bain.com/about/worldwide-offices/index.aspx. Retrieved 2012-01-30. ^ "Consulting Firm Rankings 2012: The Best Consulting Firms: Prestige". Vault.com Inc.. http://www.vault.com/wps/portal/usa/rankings/individual?rankingId1=77&rankingId2=1&rankings=1&regionId=0&rankingYear=2012. Retrieved 2012-01-30. ^ "Consulting Firm Rankings 2012: Vault Consulting 50". Vault.com Inc.. http://www.vault.com/wps/portal/usa/rankings/individual?rankingId1=248&rankingId2=1&rankings=1&regionId=0&rankingYear=2012. Retrieved 2012-01-30. ^ "The 2010 Best Firms: 1. Bain & Company". Consulting magazine. August 23, 2010. http://consultingmag.com/article/ART649699?C=1YQCevhKmgCfMuGP. Retrieved 2012-01-30. ^ a b Naficy, Mariam. "The Fast Track", 1997. ^ a b c d Jack Sweeney (February 2001). "Raising Bain". Consulting Magazine. Archived from the original on 2007-08-15. http://web.archive.org/web/20070815191854/http://www.consultingmag.com/CMCoverFeatBainfeb01.html. Retrieved 2012-01-30. ^ a b Liz Roman Gallese (September 24, 1989). "Counselor To The King". New York Times. http://query.nytimes.com/gst/fullpage.html?res=950DE5D91F3DF937A1575AC0A96F948260&sec=& spon=&pagewanted=1. Retrieved 2012-01-30. ^ "Del Monte Foods S-1 Registration". EDGAR Online, Inc.. July 24, 1998. http://sec.edgaronline.com/1998/07/24/12/0000950149-98-001331/Section15.asp. Retrieved 2012-01-30. ^ Tim McLaughlin (July 20, 2009). "Long-failed Bank of New England still pays dividends". Boston Business Journal. http://www.bizjournals.com/boston/stories/2009/07/20/story1.html. Retrieved 201201-30. ^ Schoenberg, Shira (July 15, 2011). "Romney accused of getting a bailout". Boston Globe. http://articles.boston.com/2011-07-15/news/29778328_1_mitt-romney-loan-forgiveness-federal-bailout. Retrieved 2012-01-30. ^ a b c Matthew Rees (December 1, 2006). "Mister Powerpoint Goes to Washington". The American. http://www.american.com/archive/2006/december/mitt-romney/. Retrieved 2012-01-30. ^ Nancy J. Perry (April 27, 1987). "A CONSULTING FIRM TOO HOT TO HANDLE? Bain & Co. gets its hands deep in the trousers of client companies, says an executive who knows it well. Maybe too deep, the Guinness scandal suggests.". CNN. http://money.cnn.com/magazines/fortune/fortune_archive/1987/04/27/68952/index.htm. Retrieved 2012-01-30. ^ "'Guinness Four' begin appeal". Mail Online. http://www.dailymail.co.uk/news/article87457/Guinness-Four-begin-appeal.html. Retrieved 2012-01-30. ^ a b c d "Value Partners Files Suit Against Bain & Company for Theft of Brazilian Office". PR Newswire. August 18, 1998. http://www.thefreelibrary.com/Value+Partners+Files+Suit+Against+Bain+%26+Company+for+Theft+ of...-a021047017. Retrieved 2012-01-30. ^ a b "Weil, Gotshal & Manges : Value Partners, et ano. v. Bain & Company, Inc.". Weil, Gotshal & Manges. http://www.weil.com/industries/TransactionDetail.aspx?experience=14968&service=1931. Retrieved 2012-01-30.

3.

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16. ^ "About Bain Capital". baincapital.com. http://www.baincapital.com/AboutBainCapital/Default.aspx. Retrieved 2012-01-30. 17. ^ "Senior Professionals". baincapital.com. http://www.baincapital.com/Team/Default.aspx. Retrieved 2012-01-30. 18. ^ "Ask the experts: MBAs". FT.com. February 1, 2007. http://www.ft.com/cms/s/2/b95bb672-ad5011db-8709-0000779e2340,dwp_uuid=02e16f4a-46f9-11da-b8e5-00000e2511c8.html. Retrieved 201201-30.

[edit] External links

Official website Official recruiting website [hide]

v t e

Mitt Romney
Politics Olympics Business Books Family Governor of Massachusetts 1994 senatorial election 2002 gubernatorial election 2008 presidential campaign 2012 presidential campaign Political positions Public image Electoral history 2002 Winter Olympics (Salt Lake Organizing Committee) Bain & Company Bain Capital Turnaround: Crisis, Leadership, and the Olympic Games No Apology: The Case for American Greatness Family trees George W. Romney (father) Lenore Romney (mother) Ann Romney (spouse) G. Scott Romney (brother)

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