The New Shape of PE Consulting: Why Specialization + Scale Is the Model That Wins

Transcript:

Japheth Mast (00:14)
Happy September 1st, everybody. Welcome to this Management Consulted live call. We're really thrilled to be with you today. We're joined by Paul Edwards, Global Practice Lead at Grant Thornton Stax We've got a busy, exciting conversation ahead of us, so I'm not going to waste any time, but I just want to say welcome to everybody joining in from Riverside, from YouTube, and then later from the podcast. Glad to have you with us today. again, really looking forward to this conversation about.

Private equity consulting, how to how to build a career in it. From the perspective of somebody who's like been doing this doing this for a while. Paul's seen over a thousand engagements, which which is an insane number, and overseeing a hundred over a hundred billion dollars in deal value. And so we've got a real treat here ahead of us over the next forty-five, fifty, fifty-five minutes or so.

The conversation is going to focus on where private equity consulting is heading and what sponsors are looking for, what they're buying in 2026. And then of course we have to talk about AI. So how is that changing consulting? How is it changing due diligence? And what it's not changing, and then what that means for candidates at Stax. And so Paul will dive into that and what Stax is looking for in 2026 and going forward and what the firm's value proposition is.

And then we'll also preview the undergraduate case competition world cup as well as the specific case that undergrad students can will be pr solving. So a great case and a great conversation ahead of us. And and now I'm you know excited to to really dive in here. We're joined here today, like I said earlier, by Paul Edwards with with Grant Thornton Stax.

Needless to say, Paul's seen a lot of of consulting life. He's been there, done that, and he's here at Grant Thornton Stax leading the way, pioneering the future of of of the practice. To lead today's conversation, I've got Abi Chen, who is a Management Consulted instructor, coach and and podcast host host with us.

Today, she'll be moderating the conversation with Paul and it's gonna be a a fantastic conversation. So with that, Abi, I'll I'll turn it over to you. Would love to get your introduction and then from there I'll let you just dive right into the conversation with with Paul and then at the end we'll do some audience questions, excited for those as well. Thank you everybody for submitting those ahead of time. We're excited to answer as many of those as we can. So Abi, over to you for your introduction and then we'll dive right in.

Abi Chen (03:14)
Thank you, Japheth. My name is Abi. I'm one of the coaches with Management Consulted. A little bit of background about me if I haven't yet met you or work with you. So I've spent six years at Bain and Company working in consulting. Most recently left just a few months ago as a manager. I'm currently based in Austin, Texas, and I'm working on building my own Asian restaurant here in the city because I believe that Austin needs more Asian food.

Very excited to be here to be moderating this conversation with Paul. And before we got started on some of the questions, wanted to give you guys a little bit more context about our speaker today. So Grant Thornton Stax is a strategy consulting firm specializing in commercial due diligence and strategic advisory for private equity clients. Paul, our speaker today, is the firm's global practice lead.

He joined Stax in 2005, and has spent more than 20 years building the PE practice into one supporting 300 plus engagements annually. As we've said, Paul has personally led over a thousand engagements, which is an insane number, and has advised on more than $100 billion in deal value with deep sector expertise and software and industrials. And he was named a top 25 MA leader of 2025 by the consulting report.

So very, very excited to have you, Paul, today. To get us kicked off with the conversation, Paul, as we mentioned, you've led over a thousand private equity engagements across 20 years. So what are private equity sponsors asking for from their advisors today that they were not 10 years ago?

Paul Edwards (05:02)
Thanks, Abi, and it's a pleasure to be here with you and obviously thank you for the invitation here to chat. And I'm delighted to be in front of a big crowd of folks as well who are obviously keen on understanding how things have changed in private equity and private equity consulting over the years. As you mentioned, I've seen a lot. You go back 20 years and, you know, private equity itself was more nascent then, or at least the traditional sense of private equity, more nascent.

Less than 10,000 businesses back then had private equity money in them and you know number of funds was about a tenth of what it is today. So part of what's changed in private equity over the last 20 years but certainly over the last 10 has also been about the evolution of private equity and how it impacts folks like us as consultants here as well.

You go back 15 years and the key questions private equity was asking before it made a deal or when it was pursuing an asset was very much focused on, you know, almost, I don't say check the box considerations, but certainly questions related more so to one size fits all. So in other words, is the market big enough? Are the customers happy? The defined pathway for growth? And these things tended to be a little bit more check the box.

You fast forward over the last 10, 15, 20 years and as private equity's evolved, far more thematic fundraising. So funds raised with the idea of a theme behind them. You we want to techify small businesses or, you know, we're betting here on automation. And as a result, the sort of the segmentation of private equity has sort of happened. And with it, the bar for diligence providers like ourselves has kind of raised as well.

So like the 2.0 version of diligence was really more let me appraise the asset as it looks today but let me understand how the business is going to look tomorrow. How do I think about the growth avenues? Is the growth algorithm that's kind of brought the business where it is today sustainable for the next three, five years? How do I think about different ways to grow as well?

And then you fast forward really to the last couple of years and I think a variety of factors have impacted the way in which diligence providers are being brought in today by private equity, which has further sort of changed that dynamic.

Imagine the last three years you go back from everything from the SVB collapse right the way through to tariffs, geopolitical uncertainty, a variety of other things, and then you throw AI on top of it, and investors really struggling to understand, you they can understand the businesses they're considering buying, but don't necessarily have a firm grasp on the growth and risk profile of those businesses in the next three to five years.

And with private equity being so much more now about the exit and businesses, like I say, you've gone from 10,000 private equity owned assets to 40 or 50,000. When buying businesses today, private equity also has to envision the business it's going to be selling in five years or three to five years.

And that oftentimes means you're almost double diligence into some extent. How do we think about what the business looks like today? How do you bake in a value creation plan for tomorrow? And then how do you think really beyond that for the next investor and that there's another story for the next investor to take from you? With the number of secondary deals, which is essentially private equity to private equity transactions, those who are buying businesses today really need to have an eye on the exit. And that's baking itself far more into diligence today than it ever has previously and that's really changed a lot of how we approach diligence as well.

Abi Chen (09:00)
Yeah. So how has that changed what a consultant at Stax in terms of what they need to bring day one for an engagement?

Paul Edwards (09:10)
Great question. think for us, you know, there's a lot of talk out there as we think about professional services more broadly and the relevance in an AI environment and things.

For 20 years, you think about a commercial due diligence, I'd always liken it as being a stacked bar chart between data, analysis, interpretation and implication. And in different engagements, the focus, the hours, the time, the scope may be focused on one of those four buckets differently.

What AI does is AI really allows for a massive amount more information to become available. It organizes that data and frankly part of that analysis layer far better. But what we're seeing a lot more of though is the fact that you can't really replicate judgment and you can't really change pattern recognition or at least replicate pattern recognition.

And so what we're finding a lot more of is if you can imagine how our works evolved in leveraging AI from gathering information to augmenting data sources to summarizing interviews, know, whatever it may be, with those things becoming more table stakes, the role of the consultant becomes far more about the differentiation. How do we leverage our prior experience to get frankly into the third or fourth inning of an engagement sooner to allow a client to understand the key

issues, not just the generic issues sooner. And then secondarily, how is the consultant sifting through the things that matter and the things that don't matter? Again, leveraging intellectual curiosity, communication, pattern recognition, to really be able to house down to those three or four key issues which are either going to drive or constrain a potential investment here. So with that sort of backdrop, you can see that

The best professionals here are people who can actually see AI as augmenting and leveraging such so that it can augment judgment and provide for frankly a better answer and a cleaner answer. And it's really been for us more of a double down on skills that we've always looked for. Intellectual curiosity, an ability to think about the 80s, 20s, comfort with ambiguity, comfort in shades of gray.

Being able to see things from a prior engagement and apply them to this one as well and really being able to make those right judgment calls which allow clients to not just make the right decisions but also feel like they can do so with conviction because of this marriage of now a great abundance of data that exists out there for our consultants to get their hands on. So for me, you know, it's very much become more in that stack bar basis.

folks who can think through the interpretation and the implication more effectively.

Abi Chen (12:13)
Okay.

Paul Edwards (12:14)
And if anything, the job of the consultant has now become a lot more interesting.

If the arms and the legs are a little bit more commoditized, then the brain surely is the differentiator. And it means that our consultants now today are able to get through three or four more projects in a year than they were previously. Their hours are spent far more on development focuses than necessarily

Abi Chen (12:34)
Okay.

Paul Edwards (12:35)
on building the story. And folks are getting promoted a cycle earlier than they were previously. So being bullish on AI, think the AI itself is actually

going to be a big help to consulting, especially with regards to not just enjoyment of the work, but also career development.

Abi Chen (12:57)
AI is absolutely a powerful, very, very powerful tool. And as you said, now because of AI, turning information to conviction matters more than ever. So how do you develop that capability in someone who's two to two to three years into their career?

Paul Edwards (13:15)
I think you've, you for us, it's very much and again, this is more from our experience and the way that we see the world.

You know, everyone has to have the opportunity to see that they can operate in what I always refer to as the top half of their circle. So in other words, you know, with the role, it's being able to see the support and infrastructure around you, but to realize that every project, there's a stretch opportunity. There's an opportunity to look at something differently or to expand your analytical set or whatever that may be.

And as a result, think, you we tend to find that, you know, folks themselves are not just learning quicker, but kind of rise into those challenges as well. There's a lot of books written on consulting, especially private equity consulting. There's a lot of training agendas and things like that. And I think they're very good from the base level skill standpoint, from how you use tools to, you know, some of the ways in which you can think about managerial styles in projects.

But ultimately 90 % of learning within private equity consulting and especially within CDD really does come from the projects themselves. And to have an infrastructure and an environment which, you know, frankly takes...

people from significantly diverse backgrounds of experience who are connected by intellectual curiosity, who are connected by getting to the right answer and put them in a framework which allows them to develop quickly and to also feel like they can stretch but also feel secure in that stretch.

I think really allows our teams to accelerate pretty quickly here as well. I don't think AI has changed that in any shape or form, to be quite honest with you. I think it's allowed for the acceleration of it, but I think those core skills sort of remain the same.

Abi Chen (15:02)
If you to go back in time and tell a younger version of yourself one thing about building a career in PE consulting, what would it be?

Paul Edwards (15:11)
Whew.

That is a great question. I think for me, there's a few careers where you work on perfecting a skillset or a talent or a function. And I think the beauty of consulting to private equity, especially in a diligence function, is that you're...

Third project will always be better than your second and your 50th will always be better than your

Abi Chen (15:44)
Hm yeah.

Paul Edwards (15:46)
45th and all of those things together I think mean that you know from a mentality standpoint Seeing this career is the ultimate apprenticeship and one where you never really stop learning is quite liberating When I first started my career

I was more focused on how do you perfect this? How do you get this ideal? How do you get the exact slide headline? How do you get the exact data point? You know, all of those things. And more and more the skill set I had to develop was very much this idea of managing shades of grey, not just in the projects themselves, but also frankly in my understanding of what good looked like.

And I think that, you know, I could have saved myself a lot of reps and a lot of late nights if I'd have been slightly more focused on the idea that this is about continual betterment rather than something to perfect. And I think anyone starting their career, even though this was 25, 30 years ago, anyone starting their career today, it's going to be the same thing. consulting and private equity consulting is genuinely the ultimate apprenticeship. You're never going to stop learning. You're never going to perfect it. But boy, it's going to be a lot of fun. And I think as long as you go into that approach,

it becomes a fantastic career.

Abi Chen (16:59)
I've done quite a bit of commercial due diligence work myself. absolutely agree with you. This is one segment of consulting where truly the learning never stops. So fun to learn about very niche industries and clients

Paul Edwards (17:14)
Yeah.

Abi Chen (17:15)
and help them grow their business post-acquisition. I know you've been mentioning a lot about the infrastructure around town. You mentioned the apprenticeship model, you know, teams. We also need

access to clients, proprietary intelligence. so what piece of that overall talent infrastructure do you think has had the biggest effect on keeping your best people?

Paul Edwards (17:39)
I think that in any walk of life, if people feel like they're not being developed and it becomes repetitive, they're likely to find something different to do or somewhere different to do it.

So I think there's a big pressure, which there should be on employers to make the learning experience of your teams strong from day one. We always kick off our onboarding sessions with our new hires by basically thanking them for, for trusting us with this stage of their career, whether that's someone coming out of school, whether that's someone switching jobs, someone coming out of business school, mid-level hire, senior level hire.

employee you have an incredible responsibility which isn't just about making payroll every second week. It's very much around being part of the learning and career development of everyone who walks through your door and whether they're going to be there for a year, 10 years, 30 years, whatever it may be, you have to have a commitment to making sure that there's a betterment and an improvement and people feel like they're genuinely climbing a ladder they want to climb and developing skills they want to develop as well.

Couple of things around that. Firstly, I think one thing that's a little bit unique about Stax is a 30 year history in commercial due diligence and private equity consulting. Very few players can say they've got that sort of longevity. With that longevity comes a whole bunch of infrastructure.

a whole bunch of infrastructure, which is everything from a back catalog of 8,000, 10,000 engagements to a whole variety of clients who know your brand, to a whole great slew of seniors to kind of work with and learn from. And then also tools to help the day-to-day be easier, where we can be focused much more on development and progression in tandem with delivering great work. That's everything from an offshore office in Colombo, Sri Lanka, which is a partnership.

That's basically AI tools where we have somewhere close to 29 now, which are approved and built specifically for our needs. That's an AI enabled knowledge management system, which will frankly allow the history of Stax to be at someone's fingertips, whether that's helping write an interview guide or that's just looking back to see how the answers changed in five years in a particular space. You can't replicate that infrastructure.

Abi Chen (20:05)
Yeah.

Paul Edwards (20:07)
But what you want to do is you want to marry that with an entrepreneurial environment. We've been very much built on the idea of being a bit more of an insurgent in this market. There's a lot more bigger brands. There's brands that are probably more familiar. But all that means for us is that we've got to bring our A-game day in and day out. And with that comes a great opportunity for development of folks as well. And when we hire seniors and when we're interviewing seniors,

Top priority we look for is do they have a history of mentoring? Do they have a history of mentorship? And the senior, the partner group here at Stax can look really frankly across private equity seniors across other logos and see that a lot of those folks, you know, became, you know, worked under, you know, Stax partners historically.

It's not just about delivering great work, it's also about developing the next generation of talent. And that for us is as key part as the infrastructure is as well. And then the third thing I'd mention, beyond having the great infrastructure and a great senior team that's invested in mentorship, I think the third thing is essentially trying to make sure that everyone gets the opportunity to sort of almost build their own path here.

That doesn't mean it's 50 consultants and 50 different paths, but it does mean that people get the chance to think about how they want to develop their skills, how they want their staff and assignments to reflect maybe the gaps that they've got.

how they want to think about the next five projects, be it, hey, I'd love to get into a pricing study. I'd love to be able to learn more about what sell side is. Hey, I'm really wanting to double down here on life sciences. Whatever those things may be, especially in the early and the middle and ends of a career, Staxx provides you a great opportunity to build that up yourself. And those three things I think have been core, not just to retention, but also frankly, the development of our people.

and the fact that majority of our senior team are folks who've come up through the ranks at Stax as opposed to being brought in.

Abi Chen (22:14)
That commitment to mentorship and culture, you know, in professional services firms, people are the most important asset that we have. So it's quite important that we really stay true to our people. So as you've been saying, you know, the most important investment

Paul Edwards (22:31)
you

Abi Chen (22:31)
in consulting is talent. What's one decision that you've made as a leader at Stax that reflects that belief? What are you most proud of?

Paul Edwards (22:43)
you know, I think that we,

I think COVID was a particularly tough time for professional services overall, and not because obviously the health considerations and employee wellness perspective, but for those who are in employment in 2020 and 2021, it was also more of a roller coaster. So shut down everyone at home, let's

Abi Chen (23:06)
Yep.

Paul Edwards (23:07)
learn how to work from home, let's come back, let's go back home, et cetera, et cetera.

It's just really important, I think, to play the long game on these things. So it's similar to the talent development piece. A consulting firm can write any check it likes to bring in the right talent, but how's that talent going to be enjoying the environment in two and three years' time? Is the infrastructure around those people to allow them to continue developing? And that really is about culture. But also, part of the long game, when you think about something like COVID,

is it shows itself up there as well. I mean, a lot of our peers furloughed people immediately in mid-March of 2020. A lot of our peers sort of sent interns and co-ops and other folks back to school and said they couldn't complete with them. We saw it the other way around. We called the schools and we told them that they could come finish with us.

you know, folks who had credits to earn through their consulting co-op or their consulting internships, you know, came and joined us.

And we just felt it was the right thing to do. So it wasn't just about making sure that the team is happy, healthy, and working safely from home. But it was also around making sure that we doing the right thing for our industry and frankly for our peer group here as well. And so very early in COVID decided that we would be having none of that from a furlough and layoffs and all that side of things. We would stick it out.

with the support of our then founder. We did exactly that and we played very much the long game there. And I'm very proud of the fact that, you we were able to take on double digits of folks who had had their careers sort of stunted to some degree through decisions some of our peers had made in the very early innings of COVID. And we were able to bring them on board so that they could continue their development and in some cases, finish school on time as well.

Pretty proud of that decision to be quite honest with you. I think it talks to the fact that we like to play the long game. We think that what matters to people makes good business rather than the other way around. then finally, you look at what that provides for you. And at least two of those folks are still on staff here at Stax that we went and picked up in March of 2020.

Abi Chen (25:48)
It's incredible to invest in talent when times are hard. And it really shows to people that you are truly committed. that shows through the action. So as you've been saying, you know, Stax built its reputation as a commercial due diligence focused boutique over the past few decades. And now that you're backed by Grant Thornton's skill and resources, so how does that combination change what you can deliver? And what does that work look like day to day now?

Paul Edwards (26:20)
It's a great question. I think for us.

You we were 29, 30 years in independent business or rather 26, 27 years in independent business. We, as our founders, took a step back. So a private equity firm came on board with us in 2021 and they helped accelerate a lot of the what I call professionalization and maturation considerations that we had from everything from how do we manage sales operations? How do we think about competency models for our talent?

How do we think about having a tech infrastructure which, you in a liberation of data world allows every consultants to track how they're doing from a, you know, their KPI through to how their, you know, mix of projects look today and how that's evolving. So we were able through our private equity investor to make a lot of investments in our business and frankly become

never changing the entrepreneurial nature and the DNA of our business, but being able to professionalize around that entrepreneurialness. I always say that if you put the right data in smart people's hands, they don't need managing. People will make better decisions, they will do better work. And the liberation of data that we went through in 23, 24 really allowed that to happen and really underpins what I think is a strongly entrepreneurial culture here.

And then obviously in 25 when our owner at the time in private equity senses was looking for us to move to a new owner, Grant Thornton appeared. And what I'd say about Grant Thornton is that we got to meet them in 2021 at the time when we took on private equity money. And it wasn't the right time for either of us at that stage.

But in 2025 it was. And the reason it was, I think, is because when you look at what Grant Thornton wants to do and what the platform there is doing under New Mountain Capital and their ownership, it's really about becoming as client-centric and customer-centric as possible. It's about advice and advisory rather than necessarily workstreams and solutions.

And when you read the tea leaves on how our world in private equity is evolving, more and more the answer to those questions, as I talked about before with the changes in diligence, and that's looking for more of what we refer to internally as conviction-driven diligence.

The answers to those key questions really sit sometimes between seams. It may not be in the CDD, it may be in the financial due diligence, it may be in the tech due diligence, it may be in the operational due diligence. But with today's private equity firm looking to understand the connective points between those solutions,

It's really important that we as CDD professionals have the opportunity to kind of look across and say, well, this explains why that's happening and why that's showing up in this report. It makes us better advisors. And in today's world, that's really where things are going. It's not just that the CDD, that Grant Thornton now has 26, 28 different solutions or products. It's the fact that there's a greater degree of connectivity in how our investor clients are actually making decisions.

And for us as a business, what's made Stax special for 30 plus years is something that they've been desperately keen to preserve. This isn't been about integration or standardization. It's been about what I'll refer to as amplification. It's everything that we do, which frankly is how we've had to earn a living in the market. And a lot of it, they've never thought that scale equals superiority.

everything from our AI tools to the way that we content based market it to our content based marketing to the way that we've got our own competency models and training agenda. You know, a business 100 times bigger than us is looking at those and saying like we want to take those and push them over to our into the rest of our solutions. So when we're actually part of Grand Thornton today, they provide us the scale, but not the need to standardize.

And then they also provide us sort of bigger shoulders to stand on here as we amplify not just what we do, but also the opportunities for our people as well. One year in, it's been a great start.

Abi Chen (30:50)
What an incredible partnership. Wanted to shift gears just a bit and ask you a personal question, Paul, if you don't mind. just to to show our audience here that you know we're all human. So after working on a thousand engagements worth of due diligence with something in your own life that you're committed to with zero do due diligence, with zero research.

Paul Edwards (31:15)
Great question. My eldest daughter owns a cat, which I had no idea I was allergic to until she bought it. That's probably a good starting point. So I wish I'd have done a little bit more research on that before we committed to a cat, but all good there. The other piece I'd mention, probably it was joining Stax, if I'm quite honest with you. I wouldn't say it was zero research, but I...

For those familiar with the Boston area and Cambridge in particular, our founder in 2004 had reached out to me, hearing a little bit about my background and thought I'd be someone who could come in and lead the private equity practice. And I met.

him for what was essentially a six dollar buffet in lunch in 2004 and his his his his attitude and his I guess desire to continue asking why not why not why not was something that was incredibly compelling

I knew a bit about private equity back then, not a massive amount, but it doesn't work with private equity. And to be able to sit with him for over an hour and him say, here's everything that's wrong with the current consulting model that's serving private equity. What if we got the talent that actually can do these things, but we applied it in a way that the client actually wants to see applied? And the more you dug into it, the more it made a ton of sense.

It was evident for me walking home from that lunch and called my then girlfriend and now wife and said, hey, I think I'm going to join them. I'm all in. And I've never once regretted that decision. It's been a phenomenal ride at Stax because, like I said, as private equity has grown up, so we've grown up with it.

And as a business like ours, which starts with six or seven people in Cambridge, Massachusetts, you cannot afford to be anything other than client-centric. You have to listen to your client. You have to understand what their needs are, what their pain points are, and be as hand in glove as possible with them.

And you go full circle 20 odd years later, and that's essentially the rallying cry or the discussion going on at the client interface today. It's like, tell me, help me understand how you can help me without me needing to change my process. How do you, know, how does the client ask us to be as handing glove as possible today so that we can be genuine advisors and seamless to work with?

So I'd say that one of my biggest risks was that lack of research, but frankly, 22 years later, the market is very, very much looking like my friend and former colleague, Rafi Musher, described it as.

Abi Chen (34:25)
It's a beautiful leap of faith.

Japheth wanted to turn over to you to talk a bit more about the case competition world.

Japheth Mast (34:35)
Yeah, thank you so much, Abi. Great conversation. excited to continue it. Paul wanted to share for the for the folks here just a quick preview of how they can kind of engage a little bit further with Stax. Stax is the the title sponsor of the the Undergraduate Case Competition World Cup, which takes place this fall. Any students listening to this, you're eligible. We want you to form a team and apply. It's completely free. It gives you an opportunity.

To not only gain some really cool experience with a a case competition, you'll build skills that are in high demand in the world of consulting, strategy, analytics. You'll also get some great experience for your resume. but more importantly, you'll get in front of Stax. so we've worked with them to to to build a a specific case for the case competition that the selected teams

will will work to solve and you'll pitch your solution to a a panel of Stax judges happening this fall. And just to give you a little preview, a little teaser of what that case will look like, it's it's gonna kind of mirror a Stax due diligence case. So it'll be a private equity case in the tech sector. So that's all I'm able to share with you today. But just wanted to kind of whet your appetite, give you

A little bit of an idea of kind of the kind of work that you would be doing in here if your team is selected to compete in the case competition. I've got a QR code here on the screen. Scan that. There will be a link in the chat as well. applications close in about a week and a half, so you've got a little bit of time to get your team together and submit your application. So you'll need a f four

three to four team members, so total of four to five of you students. again a great opportunity to not only get in front of Stax, but build some skills, add something amazing to your resume. And if you're one of the top five finalists, you'll present live to the whole world your your pitch, your presentation, to that same same panel. It's a a great opportunity for you. Hope to hope to see everyone in here in

the competition. best of luck. We're excited to see what you come up with.

Amazing. Well, just wanted to pop in and share that before we move on to to the last segment of of this which is which is QA. so Abi, I will turn it back over to you to dive into the audience questions. So everybody who registered, thanks for sending in your questions. We picked a few of the ones that we think

were great ones, interesting ones. And so Paul's gonna answer kind of as many as as we have time for here in the last few minutes minutes together. but again, really encourage you to consider the case competition world cup. Hope to see you in there. Abi, back to you for the the Q and A.

Abi Chen (38:02)
Thank you, Japheth, and thank you all again for registering, submitting your questions. So we've picked a few from the some from the questions you've submitted in advance. so Paul, we've got questions from Trey, who said a previous management consultant podcast talked about a differentiation crisis crisis among PE consulting firms. So how does Grant Thornton Stax differentiate itself and how do you plan to keep

Creating value going forward.

Paul Edwards (38:33)
Trey, it's a great question and I would say that it's not just about how we all differentiate from each other, but frankly, how do you differentiate from a private equity firm that now has access to every AI tool they could want? How do you think about the value that you're adding beyond what they can do themselves? And so for us, I think there's a couple of ways that we'd be going about it.

One is essentially going back to that idea of client centricity. In a lot of cases today, our clients, we always used to joke that our peers would always say that the answer to every question was four people, four weeks, $800,000. Whatever your question, I can answer it with four people, four weeks, $800,000. It's never been further from the truth in consulting today for private equity.

Oftentimes they need a week to understand this key gating question. And then we really need to dig in on data for these two weeks. And then if we get beyond the LOI, we maybe look to do two weeks on, can we really raise prices here? Can we really expand into these geographies and really get under the skin of value creation levers there as well? So this traditional product has really changed.

Being able to have a model which allows you to sort of ebb and flow and to scope accordingly so that I could say it's not just four guys, four weeks, becomes actually a differentiator in this market. And for those folks who have been built through nimbleness and speed and being able to get it right, we're finding those factors are now key differentiators. The second thing I'd mention on that point though, which is probably as important,

It's not just taking the call from a client who says I need a week here, two weeks here, three weeks on value creation. It's being able to say to the client that's what you need. As a client looking at this deal with what we've seen in the data and all of our patent recognition and all of our industry experience, we do this. And so the engagement starts long before the engagement starts.

And in a lot of cases, the competitors who are going to differentiate themselves in this market are able to not just say, going back to my first answer, how big, how fast growing, how happy are the customers, but to say this matters first, then these next two things, and then we need to quantify this.

And being able to structure something like that becomes a differentiator then for a business like ours. So having that judgment to be able to see those things, having an infrastructure and nimbleness to be able to scope to them, we think is a good differentiator and certainly something that's won us a lot of share in the last two years.

Abi Chen (41:16)
Thank you so much, Paul. Another audience question from Luca. So as commercial due diligence gets more specialized, how important is deep operating experience in areas like manufacturing, supply chain, and technology adoption? Do you see more opportunity for experienced industry operators to bring that expertise into PE Consulting alongside traditional consulting profiles?

Paul Edwards (41:43)
I absolutely do. I think it goes back to this idea that we're advisors, we're not commercial due diligence people and et cetera. We're advising on de-risking and optimizing a decision, whether that's an investment decision or whether that's a strategic decision.

And therefore, who do you bring to the table? You bring folks who can basically harness great data and determine quickly how to think about what it means for an investment or a decision. You also bring people who've got strong patent recognition doing it a dozen times in this space. And then thirdly, you bring people who can actually see the real life living experience of it as well.

And therefore for me, when we think about the overlapping nature of the solutions we talked about earlier, and the fact that value creation is now an integral part of diligence, not just growth, the skills and the people we're looking for have to kind of mirror those as well. So the traditional solution driven boundaries that professionals kind of disappear in. And I think that's a...

It's a significant opportunity for people I think. Because ultimately, know, what's commercial due diligence, what's pricing, what's, you know, a lot of this stuff is the same muscle with a different wrapper around it. And I think if you can develop the wrapper and someone can help you learn the, if you can develop the skills and then someone can help you understand how to apply the wrapper.

you're really able to apply those skills into a variety of different settings. we really like the idea of this sort of hybrid expertise plus experience model and something that we've been leveraging ourselves for a good number of years.

Abi Chen (43:24)
Thank you so much, Paul. We've got a question from Adam. What qualities or experiences make an intern or entry level candidate stand out at Grant Thornton Stax? What can students do now to prepare for a career with the firm?

Paul Edwards (43:42)
A great question. think, you know, I keep going back to it. I know it sounds pretty cheesy, but there's intellectual curiosity here. You can't train that. You really can't train intellectual curiosity. You know, we, a lot of our work is figuring out the what and then the now what. And the intellectual curiosity connects the what to the now what. Otherwise, we're just researchers, essentially.

But if we're able to connect the watt to the now watt, it allows us as a project team or as a logo or as a business to really excel in the eyes of our clients. And that's not something where you need gray hair and 30 years experience to do. That's something which you can get in 21, 22 years of age when you're thinking about situations.

And I know it's corny to say thinking outside the box, but being able to sort of challenge. And I think it goes back again to this idea of the infrastructure that someone would be part of. At Stax, if you're joining us as an intern or as a co-op, you're to be surprised that the business is pretty delayed. The best ideas can come from the 22-year-old as much as they can come from the 50-year-old.

everyone is client facing because frankly in private equity consulting you have to be client facing, you have to be on the client calls, you have to be reading out your piece. And so the folks who tend to excel there are folks who aren't necessarily waiting to be doled out the next piece of work but are part of the active thinking of the project team and aren't afraid to say well shouldn't we do it this way or more importantly why are we doing it this way?

And I think that those folks who are able to have, whether it's confidence, conviction, or just curiosity to say why internally, it sets you up so well. So as you're prepping applications, as you're prepping interviews, you know, for wherever you're going to end up, just think how important that why is. And that really stands the test. Folks like me and our business, you know, we're not looking for someone who's going to map out a 30 year career here.

you know on day one of the interview. But being able to ask the smart questions which get us to better answers and for someone to realize that hey that's kind of incumbent on all of us whether your first project or your hundredth project I think is a unique differentiator.

Abi Chen (46:12)
Thank you so much, Paul. Looking at the tank, we've got about just a few minutes left. So one more question for you. I know at the beginning of the conversation we had talked about the significant changes that we've seen the pea industry and pe consulting. so we've got one question from Elon. So where do you see the pea industry in the next 10 to 15 years?

Paul Edwards (46:34)
boy, that is another great question. So it's, I think dynamics wise, like I said, you go from less than 10,000 owned assets or less than 1500 if you go back 30 years to where we are today, 30, 40, 50,000 assets, PE becomes its own ecosystem.

It's touching every corner of US GDP, be that vertically, be that size. And it's also doing so with defined sort of exit protocols as well. So you know full well that if there's 40,000 own PE assets today, 40,000 PE assets will be sold in the next five to seven years. It's how it's going to look. So I think that there's some predictability to where private equity is.

From the idea of the asset classes though, and when you look at the trends around fundraising, there's more specialization now than we've seen before. Initially that specialization was driven by vertical, then it was driven more by theme, and then it was driven thirdly by size. You know, how do I think about large cap versus mid market, et cetera? And personally, you my bet is that the asset class itself is very, very secure and is likely to continue showing the returns it has done.

What's likely to change is the makeup of it. We're likely to continue to see more funds raised in the mid-market and lower mid-market as more businesses that have been established in the last 20 years require private equity funding or while more founders are looking to transition out and don't have a succession plan. So that's really going to be a big boom for these lower mid-market private equity funds.

And then I think the bifurcation of that is going to be the large cap funds who are going to continue getting bigger and bigger as the assets that they're looking to serve and buy become bigger and bigger. So I think that's likely to be the dynamic. It probably doesn't change a lot with regards to volume and value of deals, but I do think we're likely to continue seeing a spike at this lower mid-market given the fact that second and third institutional capital is now becoming more in vogue in the next 10 years.

On top of that you've got a whole load of privately held businesses which are likely to seek private equity exits in the next 10 years as well and it's really that sweet spot of the lower mid market. Low and behold that's where our strategy is focused so for us that's

Paul Edwards (49:12)
been our number one focus.

Abi Chen (49:16)
like exciting even more exciting times are continuing to happen in the PE world, especially for Grant Thornton Stax. Great. Well thank you so much Paul for your time today.

Paul Edwards (49:28)
Thank you, Abi.