Meghnad Desai Academy of Economics invited two stalwarts in the field of Consulting – Mr. Roopank Chaudhary (Associate Partner, Aon Hewitt India) and Mr. Dushyant Singh M&A Strategy Consulting Lead, Deloitte) to interact with the students of the current batch. The idea behind these two sessions was to provide students the opportunity to learn about the various aspects for Consulting. The details of the two talks are given below:
Q&A with Mr. Roopank Chaudhary
1) What is Consulting?
Providing solutions to different problems that a company faces is consulting. Most consultancy firms follow industry verticals to provide better solutions. So if you have a business strategy problem, you go to Consultancy firms like McKinsey, BCG, etc. If there is a technical problem, then you go to an Infosys or an Accenture. If there is a financial problem, then you approach KPMG or Deloitte. If there is a Human Capital challenge, then you come to Aon-Hewitt.
2) How much does domain specific education matter?
If by domain, you are referring to Consultancy then the answer is it doesn’t matter because there is no defined educational requirement for the field of Consultancy. Also, there are no Consultancy specific courses available. Some B-schools do offer refresher courses now but that’s about it. Further, the best Consultancy firms like McKinsey now hire professionals from diverse backgrounds. So there is no particular educational eligibility to get into Consultancy. Analytical skills and a problem-solving approach are what you need. These cannot be taught but have to be developed.
3) Is HR Consultancy similar to reputation management?
There is an overlap but an implicit one.
Reputation management is like a branding exercise. It is more of a marketing and corporate communication job. On the other hand, HR Consultancy is about assessing the real situation and sharing insights about the same with the top management officials and thus helping them in building a good reputation in the job market. Most firms work on reputation i.e. going by ‘What is a company known for?’ Breaking down and analysing this reputation is the biggest challenge for HR consultancies. For example, Reliance is known in the labour market for paying its employees well. An HR consultancy’s job will be to assess this standing of the company for its employees across all parameters.
4) What do Consultancy firms look for while hiring?
When hiring freshers, problem-solving approach is what is sought the most. Companies generally use the case study approach, also used by IIMs. This tests how you approach a problem and the way you think. They are not interested in the final solution or for that matter how much you have deviated from the final solution. They are interested in the methodology and the approach you took. So, the main competencies we look for are:
- Problem-solving ability
- Communication skills
- Interpersonal abilities – In Consultancy, you are selling your intellect and bringing that to the table. So there is a lot of convincing involved.
- Multi-tasking ability – How well you multi-task and manage everything without goofing up anything.
- Analytical abilities – Consulting also requires a lot of analysis. It requires you to be intellectually sound.
Therefore, Consultancy is more about competency than about an acquired skill set.
5) What are the occupational hazards?
A lot of stress. A consultant has to be available 24 hours as the work is completely client-oriented. This might also lead to premature aging! Also, there is a lot of travelling involved.
So basically, it is not a field for the conventional people. It is a world that is good for a certain kind of people – people who do not like a monotonous job or do not prefer predictability in a job. A consultant’s life can be quite disruptive. It is good only if you enjoy working with deadlines and are open to performing under pressure. It requires you to be thick-skinned. It can get demoralizing and stressful since you are dealing with people here. Dealing with people is not very easy – there is no black or white in this kind of a job. Most of the times it has got more to do with shades of grey. While there is quite a lot of learning involved, it is also true that consultants are most likely to be a ‘jack of all and master of none’ kind of people. Now that could sound like fun to some while not for everyone.
6) What role do freshers play?
Freshers are generally assigned research-oriented tasks. As Analysts, they are also required to do a lot of number crunching. However, unlike in investment banking, client interface in Consultancy begins within 2 weeks from hiring. And they get to work on live projects within one to one and half year.
7) What type of responsibilities does an intern have when working in a consulting firm?
Most of the times, interns are assigned to a lot of research. This research could involve application of macroeconomics, microeconomics or technical skills. However, we cannot provide access to confidential data to interns and thus an internship may limit the individual’s role to doing mainly research work for the company. In some cases, we may give interns an opportunity to interact with clients.
However, it is still very helpful for interns, especially those who want to convert their work experience to a permanent job at a later stage. They gain a better understanding of the nature of the consulting business.
8) In your view, what would you recommend as helpful tips when dealing with clients that are very demanding?
Human behaviour is not always rational. The consulting world deals with human behaviour. It is, therefore, important that a consultant makes an earnest effort at building a rapport with the client. It is important that we change our approach to suit what the client demands. If a particular client prefers to look at numbers, we’ve got to deliver results in terms of numbers.
9) What is the scope for growth in the field of consulting?
After a good enough experience in consulting, an individual can move on to taking up leadership roles in this domain. Broadly, these leadership roles are that of a Business Manager, Project Manager, Solution Expert and Regional Leader.
- A business manager typically handles an account. He is involved in driving the business, achieving targets and generating revenue.
- The Project Manager is an individual who is driving projects. He is the guy who ensures deadlines are met, clients are happy and the necessary solutions are delivered.
- A Solution Expert is more of a sector expert. He has experience and valuable insight on a particular sector and is a go-to guy when it comes to providing solutions with respect to a particular industry.
- A Regional Leader will typically lead the top management at a regional level, say Asia level.
10) How are consultants assessed?
We have something called as the End of Project Review (EOPR) where a consultant who has worked on a project would get feedback from three sources – the project manager, the client and peers. Based on this feedback, his/her performance is evaluated.
Talk by Mr. Dushyant Singh
Questions were put forth by the students on explaining the Merger and Acquisition Process in relation to consulting and investment banking respectively. This question defined majority of the interaction. Mr. Singh explained the framework and process in M&A strategy in an elementary manner so the students could easily comprehend.
He started by mentioning that M&A consists of different stages:
1) Approach Stage: During this stage the company locks down on a financial advisor or an investment banker to advise the company on the appropriate time and amount of money to be raised. But while deciding the amount of money to be raised certain the right process of raising money would need to be considered such as debt financing, private equity, mess financing, etc. Once the right choice for raising finance has been finalized, information about the company needs to be compiled such as financial statements and other subsidiary information which is compiled in an information memorandum. This memorandum is circulated among potential investors and private equity players from whom the finance would be procured. Investors decide whether to invest or not based on a number of factors such as the appropriate sector, past history of the company, size of the company, size of investment, etc.
2) Documentation Stage: This stage necessarily spans over the entire process of the M&A. But it often begins with a letter of intent. The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a due diligence process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides. After due diligence is completed, the parties may proceed to draw up a definitive agreement, known as a “merger agreement”, “share purchase agreement” or “asset purchase agreement” depending on the structure of the transaction.
3) Legal Stage: This stage involves defining the legal procedure and documentation involved and the taxation policies and rules depending on the kind of merger or acquisition taking place. Typically mergers, asset purchases and equity purchases are each taxed differently, and the most beneficial structure for tax purposes is highly situation-dependent.
4) Business Valuation: It is essential to note that accurate business valuation is one of the most important aspects of M&A as valuations have a major effect on the price that a business will be sold for. Most often this information is expressed in a Letter of Opinion of Value (LOV) when the business is being evaluated for interest’s sake. There are other, more detailed ways of expressing the value of a business. While these reports generally get more detailed and expensive as the size of a company increases, this is not always the case as there are many complicated industries which require more attention to detail, regardless of size.
5) Due Diligence: Due diligence is a vital activity in M&A transactions, and may consume several months of intense analysis if the target firm is a large business with a global presence. Using a variety of methods and accepted principles, the due diligence team pursues an answer to the question: “Do we buy–and if so–how do we structure the transaction and how much do we pay?” To answer this question, M&A due diligence activities typically focus on four areas at a target firm:
- Strategic Position
- Financial Data
- Operational Assets
- Legal Matters
Each of these four areas can be further sub-divided into business, legal, and functional areas–including IT–each receiving the appropriate level of attention and analysis based upon the category and nature of the deal.
While determining whether to merge or acquire a company a valuation needs to be determined based on the above parameter and this is arrived at by conducting hypothesis tests and arriving at certain numerical values determining the valuation of the company. It is imperative to look at quantitative data and not only qualitative data. Mr. Singh highlighted that his role typically involves conducting due diligence and that is where he fits in the entire process of the M&A framework.
The latter part of the interaction was spent in understanding the skills sets required for such a role. He threw a question at the engaged class that if they were to determine the number of marriage halls in Mumbai and arrive at a numerical figure without access to any data then what is the thought process or analysis they would use to determine the figure.
The class started assuming certain numbers and factors to arrive at the answer. The class collectively did come to some consensus but were not accurate. Mr. Singh finally stepped into to assist the students at arriving at the answer. He categorically stated that there is no right figure but to arrive at the neared possible value through proper analysis is important.
Many students were interested in internships and if possible full-time job offers and hence the golden question was asked. What skill sets do you consider while recruiting?
He mentioned that he expects the candidate to possess 3 particular skill sets. The candidate needs to be brilliant with numbers, he/she should have done something outstanding in his/her life (Climbed Mt. Everest, for instance), or possess stellar extracurricular activities and finally he needs to be able to crack a case study which shall be presented to him during the interview. Similar to the case study he asked the class to decipher.
Lastly, he mentioned that M&A strategy jobs are very niche not because of the nature of the job but due to small team sizes that exist in companies for M&A strategy and hence the lookout for the best individual. This would basically explain the requirement ratio being very low for such a role.
Date(s) - 26/08/2016 - 02/09/2016