I worked in a different consulting company.

We're brought in to double check, but also do conduct due diligence and valuation. There's some overlap between financial services and consulting companies. In some deals, you might have a bank on one side and a bank + consultants on the other.

Also, banks are good at doing standard, off-the-shelf valuations. They usually know little about the specific industry and use one-size-fits-all models.

If you want a detailed valuation, taking in account scenarios, industry changes, etc. you need people who know the industry pretty well, which usually means hiring consultants (who either are industry experts, or hire external industry experts).

In some cases, private equity firms also fill in the role of the bank in valuations. I've worked on a multi-party investment deal where one company had consultants (us), another had a bank, and another had a PE firm helping them. Looking at the different approaches and models from each company was a very interesting experience.

Exactly. I was a partner at McK and, at the time, valuation engagements were an important line-of-business, both for private equity firms or in tandem with bankers (M&A, IPOs...).

It's a strategy consulting firm and often strategy involves valuation; like should we buy a competitor or divest a division. Generally if the strategy went all the way through to an action, an investment bank would get involved to finalize things.

Would you trust a real estate agent who is paid only if the commission occurs? Both the buyers and sellers bankers only get paid on a transaction. Paying for the time can give an independent valuation. Also, many times valuations don't impact transactions.

That is kind of how it works when selling a house with a real estate agent.. they only get paid on a sale, and they went to sell as cheap as possible so they get their money.. see https://www.youtube.com/watch?v=17jO_w6f8Ck

That's my point - you don't trust them. And shouldn't trust investment banks who get paid on transactions for coming up with a correct price. (Hence you call McKinsey for the 2nd opinion since they get paid on time rather than transaction.)

> That's my point - you don't trust them.

Actually most people DO trust them. I would eat my hat if 90% of people don't agree to sell their house at what the listing agent suggests.

Fair enough. Maybe I'm just the cynic. The real estate agent trying to sell my Mom's house came up with a dozen reasons on why it should sell for mid-300s. I did the analysis on the same data and came up with mid-400s. We'll see where it lands.

Ya. Usually what it comes down to is you need to wait. I bet your agents price would sell within a month.

I asked for a higher price on my house, and it took about 90 days to turn it over... was worth the wait though, say 15k more in my pocket.