Consultancies' IPO delays cause inevitable alternatives

Will the smaller e-consultancies ever go public? Columnist Tom Rodenhauser makes some dire predictions.

Zefer’s decision to postpone its IPO comes as no surprise. The number of e-firms now waiting for more favorable market conditions resembles so many airplanes lined up on a Heathrow tarmac. Unfortunately, the stock market’s control tower doesn’t appear to be granting public clearance anytime soon.

So what happens now? The eagerly anticipated “liquidity event” has to happen in some fashion—and sooner rather than later. Remember, every e-consultancy that hankers for options has investors lurking in the background. Unlike most firms, which are usually bankrolled at an extremely modest level, the infusion of VC money allows e-firms to explode on the scene.

But those kinds of investors expect huge payoffs. Despite the cheery talk and patient posturing, many of these not-quite-public pure plays are in a quandary. With the public route closed for the foreseeable future, the only alternative to cashing out is selling the firm. Such scenarios are being explored under the characteristically vague heading of “exploring options.”

It’s quite probable that Zefer and similar firms will never see their ticker on Nasdaq. While a sale may lack the glamour of playing to Wall Street, a payoff is a payoff. VC types are patient, but not that patient.

Heard on the street
The quadrennial Worldwide Conference on Management Consulting takes place Oct. 4-7, 2000 in Berlin. Sponsored by FEACO (European Federation of Management Consulting Associations), Europe’s largest consulting organization, "Management Consultancy in a Single World" will feature speakers from European consultancies, along with representatives from firms in the U.S. and Japan. For further information contact Jorg Murmann at , by phone at, or by fax at

Benchmarking Partners, a Cambridge-based consultancy that focuses on e-business, says this about its name change to Surgency: ”(The name) represents the force of today's surging business environment and the speed and impact our clients require. Surgency is also a derivation of ‘insurgent,’ which is an accurate descriptor of the attitude of the firm's clients and the market-leading companies they represent.”

Guess that’s better than “…chicks dig it.”
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2000, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.

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