Extracting Value from Consultants

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A standard joke in business is that consultants work by asking existing employees for the solution and then packaging it nicely, rubber stamping it and presenting it as their solution to senior executives. The pervasiveness of this joke in business points to the the deeply held belief that this characterisation of consultants is true. Although the frustrations that businesses have in working with consultants is clear, the implication that consultants cannot add value beyond providing a stamp of external approval is false and quite unfair.

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The Future of Investment Banking in the GCC

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Investment banking in the UAE in particular and the GCC in general saw an unprecedented jump in activity in the period 2003-2008. After a couple of decades of basic boom-bust IPO activity the explosion of activity in the equity markets triggered a smaller, but no less dramatic, growth of investment banking activity that saw the deployment of new investment banking teams in new stand alone institutions, as well as branches of international banks and divisions in local commercial banks. The global financial crisis that was triggered in late 2008 ended the expansion era. After six years in the doldrums there are whispers about the rebirth of investment banking. The opportunities do indeed exist but not where conventional wisdom is pointing.

The future of investment banking (IB) lies in selecting the right mix of services and business model. Services can be broadly categorized into four areas: equity capital markets (ECM), debt capital markets (DCM), mergers and acquisitions (M&A) and sales and trading (S&T). ECM basically consists of raising equity funding: IPOs and rights issues. Supporting services include a strong distribution network, the ability to underwrite offerings, which requires a large balance sheet, and S&T services to support post offering trading, in other words make sure that people can trade the new shares. DCM is similar to ECM except that it targets funds raised by debt. The supporting services are the same. A successful M&A practice, companies buying and selling other companies, really requires deep relationships with local and regional clients with a full understanding of their business. S&T requires infrastructure and a large balance sheet to allow clients to trade on margin. These descriptions are already beginning to point to a certain conclusion. Continue reading