There is a big sweet spot between startups and the bulge-bracket and Collins Stewart PLC is sitting right in the middle of it.
The U.K.-based investment bank, which has been in the U.S. for about a decade, said the crisis gave it the chance to break the top-25 of U.S. league tables. And it has been rushing to do just that, in part, by poaching big-ticket analysts from the likes of JPMorgan and Goldman Sachs.
FINS sat down with U.S. CEO John Abularrage to discuss the firm's focus on value, why it wants to pay higher salaries and why it would rather build a great team, than buy one.
This is part two of a two-part interview. See the first part here.
How do you find talent? Do you use outside recruiters?
We do. We use a number of recruiters. We found a few that we think are superb, but really most of the talent that we've hired has come through word-of-mouth -- introductions, people we've worked with in the past.
The best way is you hire one person and they tell you that there are five other people who are unhappy and who are good producers.
There are many avenues to getting where you need to be.
What kind of volume have you seen in the past few months? Do you get a lot of resumes over the transom?
Tons. Tons. You could spend all day, every day going through them.
The first thing we do is look at what they do. If we're looking for someone in that area, great. If not, we say 'Thank you, but no thank you.'
If it's someone who does what we're looking for, we'll bring them in. In a half-hour you get a pretty good idea as to whether or not it's somebody you'd want to work with and whether it's somebody that you think can boost your business.
Typically, you're targeting bulge-brackets?
Well, in terms of people's franchises, in the research area, if you're at a bulge-bracket and you're well-respected, you'll come along with a number of clients that want to continue to speak to you and will pay for you. So sometimes that's an easy call, but if you can find someone who's made it a smaller firm, sometimes those guys are incredible. We're pretty agnostic as to where we get people from, we just want to make sure that the people we get are the best at what they do.
How is Collins Stewart different culturally?
We are a pay-for-success organization. We're an organization that likes to pay people. We don't offer big guarantees upfront. We try not to build businesses that cost us money. We are focused on performance.
You've grown a lot by acquisition, is there any appetite for that in the states now?
Nope. I, by nature, am almost always against acquisitions. I think that 95% of them fail, whether you pay the wrong price for them, the cultural fit isn't right or you end up sacrificing the good parts of your business to bring in other parts. We've seen it over and over again. If you're able to hire and make the jump organically, it's a much safer way to do it.
In a happy time, when people are well-paid and they feel like their careers are on the right path and they are working for a good organization, you've got to offer significantly more than they're currently making if you want to convince them to move. So I think what happens is, people decide 'I can't grow this business organically, I'm going to have to make an acquisition and there's a great one.'
Right now, we're seeing candidates that we would never have seen a year ago, so to even consider an acquisition, it would have to knock my socks off. I'm much more comfortable taking on a team.
We've seen a lot of that recently.
Yeah. People put the same sort of deals that we'll put on the table, which effectively give the team an ownership in the profit that they'll give to the firm. It makes them feel like owners of the business and that's motivating.
Your profits are siloed by industry or team?
Sure. If you want the overall office to make a 20% margin, why wouldn't you bring a team in from somewhere else and structure the deal where they know how they are going to be paid, minus your 20% margin? That's where you're going to be at bonus-time anyway, so why not be upfront about it?
Do you think you're in a sweet-spot right now with your current headcount?
I do, but it's less about the head-count. It's more about having a well-capitalized parent behind you. We're not in a position where we need to rush. We're not in a position where we need to take unnecessary chances. We have 160 people in the United States, so when we're recruiting people from established organizations, we're not showing them an empty room and saying, 'Trust me, we'll build it.'
Our client list is not vastly different from that of a bulge-bracket firm, though of course they pay us less. All the lines are open, all the settlement stuff is open, so you're not joining a startup; you're joining a well-established firm that's trying to go from where it is today to a top-25 brokerage in a very short period of time.
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