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Now
and again, a rock band out of nowhere will appear on the top 40
charts and rocket up the list, establish a reputation and make
millions in sales. Mitchell Madison Group (MMG) was formed when
it split off from A.T. Kearney a few years ago and rocketed to
the Consultants News' Largest 40 list in 1997 with revenues of
$100 million for 1996, which doubled the following year without
a significant acquisition.
But
as with some music sensations, they fall to earth, and with Mitchell
Madison Group, it was a fast fall.
In
1994, on a street named Mitchell in upstate New York, ATK's financial
services practice head Tom Steiner and other partners developed
the plan to bolt from ATK. Steiner, along with 22 of the 25 founding
partners of MMG, are ex-ATK and ex-McKinsey. Including the founding
partners, Steiner took 135 consultants with him to form MMG, giving
the start-up instant critical mass. The Manhattan address was
on Madison Avenue, hence the name, Mitchell Madison Group. The
firm now has 15 offices worldwide; 7 in North America, 6 in Europe,
1 in Africa, and 2 in Australia.
But
disaster struck in early 1999, when the firm couldn't keep up
with its own unbelievable growth. The firm began recruiting MBA's,
undergrads, and industry experts faster than the firm could find
work for them. The result? MMG was paying many consultants who
were "beached"-as in hanging around the office like anxious firefighters
waiting for the call-and thus not billable. The firm cut 7% to
10% of its consulting staff (typical of a firm in a cash crunch,
according to Consultants
News) and retained the investment bank Donaldson, Lufkin
& Jenrette to help evaluate options. Rumors of a number of partners
leaving the firm erupted around the same time as well. Among the
partners known to have fled the firm included Will Riordan, who
was a top recruiter at MMG and was described as "charismatic"
by more than one consultant. Riordan is widely credited for making
the firm a favorite on B-school campuses. The firm also rescinded-then
reinstated-15 offers made to undergraduates at six schools in
the spring. It was widely believed MMG was up for sale.
On
the morning of July 30th, 1999 Internet services firm USWeb/CKS
announced its intent to acquire the firm. The deal has received
favorable marks by some analysts. Part of the rationale for the
acquisition of MMG by USWeb/CKS was MMG's financial services sector
focus. The financial services industry is undergoing significant
changes in the face of the e-commerce boom. The acquisition was
also meant to bolster USWeb/CKS's presense in other regions of
the world, including Asia, where MMG has a healthy business. (USWeb/CKS
has experienced some fast growth itself, doubling its revenues
in 1998.) At this point, it is unclear if USWeb/CKS intends to
fold the MMG name to its own, but USWeb/CKS may still exploit
the MMG name, which is almost synonymous with "strategy."
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