Wednesday, February 18, 2009

BearingPoint Goes Chapter 11

I was wrong about BearingPoint's business Model; turns out that you can bankrupt a services business.

"Between 1999 and 2002, the company took on debt to make various acquisitions.

The company later delayed filing its annual financial reports as it worked to establish internal controls. Corporate expenses rose, due to accounting and audit costs. The company also took charges related to the decline in fair value for some of its reporting units.

In 2005, the SEC had launched a formal probe in connection with the company's business dealings." - Reuters
Translation: Senior management is 100% responsible for this bankruptcy.


Consultant Insider said...

This is depressing. We are a little insulated from the GFC here in Oz - but I have a bad feeling something is going to happen layoffs wise.

Chris said...

Reuters is being kind.

The statements in the press when Harry You left BearingPoint revealed a board that hired the wrong CEO for the strategy they wanted to pursue.

You was a serial deal maker - Goldman partner, CFO that too Accenture went, Oracle CFO that closed the PeopleSoft deal. Naming him just screamed that the company was looker for a buyer.

The board apparently had no intention of portfolio moves and was committed to organic growth plus small acquisitions. Both sides made statements about disagreements on corporate strategy and the role of M&A in the future of the firm.

One would think a Greggian disconnect like that would come out during the interview process.

No strategic direction plus fouling up their own ERP systems makes it hard for consultants to be credible in the market.

Anonymous said...

From an insider who got out in time - 100% agree that it was Sr. Management's fault - saw it with my own eyes.

Wednesday, February 18, 2009