Thriving in unhappy times<\/p>\n
By I. Christianto<\/p>\n
JAKARTA (JP): A company applies for business consolidation to
\navoid bankruptcy, while the another is seeking refuge through
\nmergers and acquisitions. There are also companies suffering from
\npro forma losses or mired in disputes due to contract breaches.
\nThis gloomy scenario may benefit another party: business
\nconsulting firms.<\/p>\n
In terms of dispute between two companies, as in the case of
\nPT Telkom and PT AriaWest, for instance, it represents how
\nbusiness consultants have played a significant role in either
\nending the problem sooner or prolonging it.<\/p>\n
The lingering dispute between the two companies stemmed from a
\ndisagreement over Telkom's plan to buy out AriaWest's stake in a
\njoint operation partnership. The two sides disagreed on the
\ncompensation to be paid.<\/p>\n
AriaWest corporate communications manager Denni Koswara said
\nin March that AriaWest's assets were valued at US$1.3 billion by
\nthe Canadian Imperial Bank of Commerce. The company, however,
\nlowered the figure to $735 million in May.<\/p>\n
Meanwhile, based on Telkom's valuation, AriaWest's assets are
\nonly worth about $270 million.<\/p>\n
In valuing the assets, Telkom hired a business consultant, or
\nmore precisely a financial advisor, Salomon Smith Barney, said
\nDina Arifani of Telkom's investor relations.<\/p>\n
She said Telkom did not hire the consultant exclusively for
\nthe case, but as a corporate financial advisor.<\/p>\n
\"We hired Skaddenn and Arps for the financial analysis in
\nterms of litigation support in the AriaWest case,\" said Dina,
\nadding that for corporate legal affairs, Telkom appointed HPP,
\nwhich is affiliated to Baker McKenzie.<\/p>\n
She said normally the financial advisor worked independently
\nand based on a long-term contract.<\/p>\n
\"Independently means we can't influence or interfere. But
\nthere are always meetings and discussions. The most important
\nthing is trust,\" she said, adding that every valuation figure si
\nbased on accurate data.<\/p>\n
So if there is a big difference of asset valuation in the
\nTelkom-AriaWest dispute, both sides must have given different
\ndata (on the same project) to their consultants. Nonetheless,
\nwhether the business consultant or advisor is for legal,
\nfinancial or management aspects, the business consulting firm
\nwill earn a huge income.<\/p>\n
There are usually two types of payments charged by business
\nconsulting firms, retainer fee and success fee. Retainer fee is a
\nfixed rate negotiated between the firm and client. The fee will
\nbe paid on a regular basis such as weekly or monthly, based on
\nthe contract.<\/p>\n
Success fee is usually available per case, for instance when
\nthe consultant is successful in clinching an acquisition, merger
\nor take over for the client.<\/p>\n
Nia Sarinastiti of PT Accenture said normally the fee ranged
\nbetween $100 and $1,000 based on daily consultation.<\/p>\n
\"There are many factors that determine the fee, which depends
\non the complexity and type of contract. Consultation for strategy
\nis so different from consultation for technology implementation,\"
\nshe said.<\/p>\n
Bagus Ichwanto of PT Indotrade Pratama Consultant agreed the
\nfee was mostly negotiable depending on the complexity and period
\nof contract.<\/p>\n
\"We have two types of fee, in Indonesian rupiah and U.S.
\ndollar, as we serve both local and overseas corporations,\" he
\nsaid.<\/p>\n
He added the fee would also vary according to the consultant,
\nwhether she or he is a senior or junior specialist.<\/p>\n
Services<\/p>\n
The financial crisis in Indonesia has created problems for
\nseveral big companies in the country, and at the same time,
\noffered opportunities for business consulting firms.<\/p>\n
Heru Prasetyo, Accenture's country managing director, said
\nmany companies affected by the monetary turmoil sought business
\nconsultants for help.<\/p>\n
\"When the financial crisis first hit Indonesia in 1997, some
\ncompanies were immediately hampered. But there were also
\ncompanies that only began to be affected years later but still
\nare until today. They both need help from business consultants,\"
\nhe said.<\/p>\n
Accenture, a leading player in the business, offers various
\nservices ranging from advisory (such as study and business
\nreports) through advice (on how to implement strategies and
\nreengineer business plans), innovation, financing and
\noutsourcing. It has an equal number of local and foreign clients.<\/p>\n
In the meantime, many multinational corporations operating in
\nIndonesia need strategic advice on public affairs and government
\nrelations.<\/p>\n
Dennis Heffernan of Van Zorge Heffernan and Associate said
\nmost clients wanted to consult on strategic planning external
\nrelations.<\/p>\n
He said such advice was important for most multinational
\ncorporations, especially in conditions such as the present in
\nIndonesia.
\n\"We also hold regular conferences two or three times every year
\nas well as publish bimonthly reports as part of our consulting
\nservices,\" he said.<\/p>\n
Bagus Ichwanto of Indotrade said his company mostly served
\nforeign investors wanting to do business in Indonesia.<\/p>\n
\"We give them reports of potential businesses to the
\nacquisition process, the legal aspects and general guidance,\" he
\nsaid.<\/p>\n
He said his company also offered services to domestic
\ncompanies planning to expand their business overseas.<\/p>\n
In addition to consulting firms offering business strategy,
\norganizational structure, financial valuation and government
\nrelations, there are many others serving various business-related
\nconsultations.<\/p>\n
Some companies specialize in certain subjects including
\nadvertising, public relations services, media relations, human
\nresources, management consultation, marketing, e-commerce and
\nimproving business plans. Others offer information technology
\nplanning.<\/p>\n
There are also consulting firms offering organizational
\npsychology, management training and customer relations. The other
\nconsulting services are in the areas of customer service, product
\ndistribution and legal issues.<\/p>\n
Some business consultants provide courses, lectures and
\nconsultancy services to explore business strategies, technology
\nand the future of work environments. There is also some that
\nprovide documentation and systems analysis consulting to
\nmanufacturing and service companies.<\/p>\n
Other consulting firms help facilitate network implementation
\nand troubleshooting, computer-related resource placement and
\nwebsite development. Meanwhile, financial consulting services
\nhelp clients improve the management of finances and provide
\nfinancial analysis for litigation support.<\/p>\n
It is interesting to note that some consulting firms offer
\nexpertise in advancing the policy objectives of nonprofit
\norganizations, and they can also design advocacy campaigns
\ntailored to meet organizational budgets and resources. But such a
\nservice is not popular in Indonesia.<\/p>\n
There are several different business structures which
\nbusinessmen can choose to operate their business smoothly and
\nsuccessfully. Problems, however, are inevitable due to, among
\nothers global competition, internal organizational problems,
\ndomestic political matters or technology advancement.<\/p>\n
Come and ask for advice at business consulting firms if the
\nfee is reasonable and there is still a budget for it.<\/p>",
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"sponsor": "Okusi Associates",
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