When the Suits Show Up

There is a moment in a lot of private equity holds when someone in a board meeting says the words. We should bring in McKinsey. The room nods, because nobody ever got fired for hiring a brand-name consultancy, and a few weeks later a team of very smart people in their late twenties is sitting in a conference room at one of your portfolio companies building a market model. I spent time inside that machine before I sat on the other side of the table, so I know how good they are and exactly what they cost.

I have been on every side of this. As an operating partner I have sat in the management presentation while one of the big three walked a board through a growth strategy. I have signed off on the engagements. I have read the interim updates on the market work, the prioritization decks, the slides built to a polish no internal team could match. I know exactly what that money buys.

So let me tell you what it actually buys, where it is worth it, and the part most firms never say out loud, which is that the decision to call the suits is usually a symptom of a structural problem upstream.

The Build-or-Buy Trap

Step back and look at why the consultants get called at all. A private equity firm that wants real operating muscle has two ways to get it, and both are expensive.

The first is to build an in-house operating team. On the industrials side that looks like a managing director generalist who sits on boards, plus a bench of specialist VPs: digital and data, procurement and supply chain, talent and org, manufacturing and lean. Each carries fifteen or twenty years of experience and a compensation package to match. That is a heavy fixed cost, and it only pencils out in a high deal flow environment where the team stays busy across enough companies. In a slower year that bench becomes a very expensive thing to carry, and the pressure to justify it warps how you staff deals.

The second way is to rent the capability when you need it, which is where the big consulting firms come in. No permanent payroll, no idle bench, a premium per engagement instead of a salary all year. In a lower deal flow stretch, renting looks like the disciplined choice.

Both options answer the same question: who does the operating work, and what does it cost to have them on hand. Hold that frame, because it is the whole game.

What You Are Actually Buying

Strip away the brand and a top-tier engagement delivers three things. The first is analytical horsepower: a team that will interview forty customers, build a bottoms-up market sizing, and pressure test it in three weeks, because that is the labor you rented. The second is an answer with a logo on it, worth real money when you need to move a board or a lender or a management team that will not take the conclusion seriously coming from anyone cheaper. The third is air cover, the ability to make a hard call (a plant closure, a head count cut, a strategic exit from a product line) and point to an independent third party who recommended it.

Those are real services, worth every dollar on the right deal at the right moment. When I have brought in a top firm, it was usually for the second and third reasons more than the first. The analysis was good. The license to act on it was the thing the situation could not generate fast enough internally. You are frequently paying a seven-figure fee for legitimacy and cover, with the analysis bundled in. The analysis itself, the part that feels like the product, is often the cheapest thing in the engagement to replicate.

The Engagement That Taught Me the Most

On one of my industrials holds we ran a parallel track. A top firm was doing market work on one side. The internal operating team, working with the company's leadership, was doing initiative prioritization on the other. Same business, same quarter, two different engines pointed at the value creation plan.

The market sizing came back excellent. Rigorous, well sourced, exactly what we paid for. And almost none of it changed what we did on Monday. The decisions that moved the business came out of the unglamorous internal work: a list of initiatives, ranked, with an owner and a date next to each one. The fights over what came off the list. The hard conversation about which two things we would actually do this quarter and which eight we would stop pretending we had the capacity for.

The consultants told us how big the prize could be. The internal work told us what to do next week. Both mattered. Only one of them required a seven-figure check, and it was not the one that drove the result.

The consultants told us how big the prize could be. The internal work told us what to do next week. Only one of them required a seven-figure check, and it was not the one that drove the result.

Paul W. Swaney III

Why the Incentives Drift

The parallel track also showed me why this happens so often. The consultant's incentives point in a different direction than yours.

Start with the fee structure. Hourly and daily rates quietly reward longer engagements. Fixed-fee project work rewards speed over depth. Either way, the economics of the consultant and the economics of the asset diverge. The failure modes follow from there. Scopes get written rigidly up front and fail to bend when the real problem turns out to be somewhere else. Teams optimize for the immediate deliverable over the long-term health of the business. Knowledge stays with the consultants instead of transferring to your people, which breeds dependency and a reason to call them back next quarter.

The one that cost me the most patience is the most common. When a major challenge hits an asset, consultant teams reliably default to generating content, more analysis, more slides, more frameworks, when the moment demands someone driving for an immediate decision and owning the outcome. Polished content feels like progress. It is motion that a stuck business mistakes for momentum while the clock runs.

Where the Premium Is Justified

I am not anti-consultant. There are situations where I would write the check again without hesitation. When you are entering a market you genuinely do not understand and need a real primary research effort fast, renting that team is rational. When a management team has dug in on a belief that the data contradicts, an outside firm can break the logjam in a way an operating partner shouting from a board seat cannot. When a lender or a co-investor needs third party validation before they will fund the next move, the logo pays for itself.

The common thread is that the value lives in what a brand and an independent seat provide, the credibility and the cover, more than in the raw thinking. When you need those things, pay for them. When you are buying them out of habit, or to feel diligent, or because the board expects to see a famous name on the cover page, you are lighting money on fire and calling it rigor.

What This Means for a Fundless Sponsor

Here is where the model collapses the whole build-or-buy choice. A fund is stuck picking between an expensive permanent bench and an expensive rented one, and in a slow deal flow year both options get painful. The structure pushes you toward whichever fixed cost is easier to defend in the moment.

Swaney Group is built to sidestep that choice entirely. We are operator-driven by design. I am the operating partner, deal by deal, sitting inside the business rather than parachuting in. There is no bench waiting on deal flow, and there is no need to rent a third party for air cover on a hard decision, because I hold the authority to make the call and the accountability that comes with owning the outcome. The operating muscle a fund has to either build or buy, I bring to the one deal in front of me, as a variable cost that exists only when there is a deal to apply it to.

Which is why I do not need consultants, with one exception that matters. I buy outside help surgically, for the specific capability I cannot manufacture: a piece of primary research, a technical assessment, a specialist who has done the exact thing ten times and will hand the knowledge back when they leave. That is the whole list. I never pay a premium for a brand-name team to generate content inside a company I am closer to than they will ever be.

The most expensive consultants in the world are very good at one thing above all: telling you what you already suspected, with enough authority that you finally act on it. If you are close enough to the business to already know, and you already hold the authority to act, you have quietly removed the largest line item on a lot of value creation plans. Spend the money on the business instead.

Paul W. Swaney III is the founder of Swaney Group Capital, a fundless sponsor focused in the lower middle market.