On declining mandates.

In any given year, the firm receives more enquiries than it accepts. The ratio is consistent: more declined than taken. The selectivity is deliberate.

There are three reasons for declining a mandate. The first, and most common, is that the work does not match the standard the firm has set for itself. The work may be entirely legitimate, sometimes commercially attractive, and often proposed by people I respect. But if the alignment of values, the seriousness of the problem, or the quality of the people inside the company falls below a certain threshold, the answer is no.

The second reason is geography. The firm operates where it possesses first hand knowledge, institutional relationships, and context literacy. Mandates in markets where those elements are absent belong to other advisors, not to this one. Declining a mandate for which I am not the right person is itself a service.

The third reason is calendar. Each year, the firm accepts only a small number of mandates because each one is carried personally by the principal. If an additional engagement would dilute the attention given to the existing ones, the answer is no. The math is unforgiving: an advisor with ten mandates cannot give each client what an advisor with three can.

There is a fourth reason, less mechanical and harder to explain. Sometimes a potential client is asking for the wrong thing. They seek strategic advice when the real issue is a difficult internal conversation that no consultant can conduct on their behalf. In such situations, declining the mandate is often more useful to the prospective client than accepting it.

The clients who do become engagements benefit from these refusals as much as from the work itself. They know the firm is not pursuing volume. They know their mandate receives attention because it earned that attention. They know the next client will be held to the same standard.

The decline is not the rejection. It is the standard from which acceptance acquires its meaning.

Carlos Magalhães