JP/8/G00

JP/8/G00

By I. Christianto

JAKARTA (JP): A company applies for business consolidation to
avoid bankruptcy, while the another is seeking refuge through
mergers and acquisitions. There are also companies suffering from
pro forma losses or mired in disputes due to contract breaches.
This gloomy scenario may benefit another party: business
consulting firms.

In terms of dispute between two companies, as in the case of
PT Telkom and PT AriaWest, for instance, it represents how
business consultants have played a significant role in either
ending the problem sooner or prolonging it.

The lingering dispute between the two companies stemmed from a
disagreement over Telkom's plan to buy out AriaWest's stake in a
joint operation partnership. The two sides disagreed on the
compensation to be paid.

AriaWest corporate communications manager Denni Koswara said
in March that AriaWest's assets were valued at US$1.3 billion by
the Canadian Imperial Bank of Commerce. The company, however,
lowered the figure to $735 million in May.

Meanwhile, based on Telkom's valuation, AriaWest's assets are
only worth about $270 million.

In valuing the assets, Telkom hired a business consultant, or
more precisely a financial advisor, Salomon Smith Barney, said
Dina Arifani of Telkom's investor relations.

She said Telkom did not hire the consultant exclusively for
the case, but as a corporate financial advisor.

"We hired Skaddenn and Arps for the financial analysis in
terms of litigation support in the AriaWest case," said Dina,
adding that for corporate legal affairs, Telkom appointed HPP,
which is affiliated to Baker McKenzie.

She said normally the financial advisor worked independently
and based on a long-term contract.

"Independently means we can't influence or interfere. But
there are always meetings and discussions. The most important
thing is trust," she said, adding that every valuation figure si
based on accurate data.

So if there is a big difference of asset valuation in the
Telkom-AriaWest dispute, both sides must have given different
data (on the same project) to their consultants. Nonetheless,
whether the business consultant or advisor is for legal,
financial or management aspects, the business consulting firm
will earn a huge income.

There are usually two types of payments charged by business
consulting firms, retainer fee and success fee. Retainer fee is a
fixed rate negotiated between the firm and client. The fee will
be paid on a regular basis such as weekly or monthly, based on
the contract.

Success fee is usually available per case, for instance when
the consultant is successful in clinching an acquisition, merger
or take over for the client.

Nia Sarinastiti of PT Accenture said normally the fee ranged
between $100 and $1,000 based on daily consultation.

"There are many factors that determine the fee, which depends
on the complexity and type of contract. Consultation for strategy
is so different from consultation for technology implementation,"
she said.

Bagus Ichwanto of PT Indotrade Pratama Consultant agreed the
fee was mostly negotiable depending on the complexity and period
of contract.

"We have two types of fee, in Indonesian rupiah and U.S.
dollar, as we serve both local and overseas corporations," he
said.

He added the fee would also vary according to the consultant,
whether she or he is a senior or junior specialist.

Services

The financial crisis in Indonesia has created problems for
several big companies in the country, and at the same time,
offered opportunities for business consulting firms.

Heru Prasetyo, Accenture's country managing director, said
many companies affected by the monetary turmoil sought business
consultants for help.

"When the financial crisis first hit Indonesia in 1997, some
companies were immediately hampered. But there were also
companies that only began to be affected years later but still
are until today. They both need help from business consultants,"
he said.

Accenture, a leading player in the business, offers various
services ranging from advisory (such as study and business
reports) through advice (on how to implement strategies and
reengineer business plans), innovation, financing and
outsourcing. It has an equal number of local and foreign clients.

In the meantime, many multinational corporations operating in
Indonesia need strategic advice on public affairs and government
relations.

Dennis Heffernan of Van Zorge Heffernan and Associate said
most clients wanted to consult on strategic planning external
relations.

He said such advice was important for most multinational
corporations, especially in conditions such as the present in
Indonesia.
"We also hold regular conferences two or three times every year
as well as publish bimonthly reports as part of our consulting
services," he said.

Bagus Ichwanto of Indotrade said his company mostly served
foreign investors wanting to do business in Indonesia.

"We give them reports of potential businesses to the
acquisition process, the legal aspects and general guidance," he
said.

He said his company also offered services to domestic
companies planning to expand their business overseas.

In addition to consulting firms offering business strategy,
organizational structure, financial valuation and government
relations, there are many others serving various business-related
consultations.

Some companies specialize in certain subjects including
advertising, public relations services, media relations, human
resources, management consultation, marketing, e-commerce and
improving business plans. Others offer information technology
planning.

There are also consulting firms offering organizational
psychology, management training and customer relations. The other
consulting services are in the areas of customer service, product
distribution and legal issues.

Some business consultants provide courses, lectures and
consultancy services to explore business strategies, technology
and the future of work environments. There is also some that
provide documentation and systems analysis consulting to
manufacturing and service companies.

Other consulting firms help facilitate network implementation
and troubleshooting, computer-related resource placement and
website development. Meanwhile, financial consulting services
help clients improve the management of finances and provide
financial analysis for litigation support.

It is interesting to note that some consulting firms offer
expertise in advancing the policy objectives of nonprofit
organizations, and they can also design advocacy campaigns
tailored to meet organizational budgets and resources. But such a
service is not popular in Indonesia.

There are several different business structures which
businessmen can choose to operate their business smoothly and
successfully. Problems, however, are inevitable due to, among
others global competition, internal organizational problems,
domestic political matters or technology advancement.

Come and ask for advice at business consulting firms if the
fee is reasonable and there is still a budget for it.