Life in the Boutique
A conversation with Ken Marlin, managing partner of Marlin & Associates: "There’s the potential in these jobs to make a fair amount of money, but there is an expectation that people will work hard for it."
Ken Marlin is founder and managing partner of Marlin & Associates, a boutique advisory and consulting firm focused on middle–market companies in technology, information, media and business services. Previously, he’d spent ten years as an executive at Dun & Bradstreet, overseeing a number of information and technology products and strategic acquisitions. He left D&B to head the U.S. operations of Telekurs, which he eventually took private. When Bridge Information Systems acquired the firm in 1997, he stayed on as executive vice president. He then joined the private equity firm Veronis Suhler Stevenson to lead its Business Information and Internet practice. He started Marlin & Associates in 2002.
In this, the first of two parts, Marlin talks with eFinancialCareers about the work of a boutique investment firm, the competition for talent, and the type of people who get his attention during the hiring process.
Can you tell me what a typical day is like for you? If there is any such thing?
I do think there are fundamentally two aspects of being in a smaller boutique investment bank? Larger banks have the same functions but tend to divide it up into separate people. At smaller banks, everybody’s doing everything.
So, two basic functions: One has to do essentially with marketing – getting the next client. The other one has to do with executing and working with the clients that you’ve got. There’s a constant demand to be doing both.
We just signed up a new client yesterday, so a good part of the last week has been about discussing terms with that client, though the conversation has been ongoing for a year. There was some conversation with them today about next steps and how we’re going to move forward. We also had two meetings today with people who could be prospective clients in the future.
At the same time, we have three deals in various stages in the market. When I’m done here, I need to get back to work with some of our guys on a financial model and an information memorandum related to one of those companies. And for a different company bids are due in on Monday. We have a client in Europe who expects an analysis of what the bids are on his company Tuesday morning, which means someone has to put those together on Monday night. One of the things we’re going to sort out today is exactly how we’re going to do that.
Especially if it’s international, it sounds like they’re long days.
They can be very long days. There are plusses and minuses with working on international deals. We have a couple of young guys who work here and last week two of them were over in Amsterdam and they enjoyed that. They spent three or four days in Amsterdam. They had long days, but it is something they get to do. One of our guys just came back from London yesterday.
The flip side of that is that we often wind up having conference calls that are either early in the morning or late at night, depending on where the client is and what works out best for them.
I talk to people who say there’s a war for talent going on in the financial world. Do you find that’s true? Is it hard to find good people right now?
We just hired a new analyst – It hasn’t yet been two months. I guess the short answer is it took us a little while, but we did find somebody that we thought was qualified, and we did have a number of qualified people apply. Now, that’s at the analyst level.
As you get more senior than the analyst level, I think you have a situation that’s not uncommon in most industries. There are fewer and fewer qualified people as you move up, and those people who are really good tend to get paid a lot of money. That may be what people are referring to.
What kind of people attract your attention, not just at the analyst level but in general? How do you decide that a person is serious and is someone you really want to think about?
I would say we have several criteria, and only two of those criteria relate to the person’s skill set.
Clearly anyone who comes to work with us has to be comfortable in a quantitative environment. They have to be comfortable running spreadsheets and financial models. I’m not saying they actually have to know it all: You know, an analyst can come in and learn some of it here, but they certainly can’t be afraid of the numbers, they can’t be afraid of doing math. There’s always a math component to what we do. That one’s relatively easy to get. There are a lot of people out there who are comfortable with models.
The second one, from a skill–set standpoint, is much harder to get, though it sounds simple. We need people who can communicate clearly in both spoken and written English. That’s probably the single biggest thing that blows people out of an interview with us. They think they speak English, but actually they speak some patois of local language. And, the vast majority of people we find can’t really write. They can’t write formal English. They tend to write the way they speak, and they don’t speak that well. You can’t get anywhere here if you can’t punctuate. Most people we talk to have a very difficult time clearly communicating in clear English.
The third criteria is you have to be willing to multitask in essentially an unstructured environment. You have to be self–motivating. At any given time we could be working on three deals, and you could be working on all three deals, plus working on a marketing pitch for somebody else. There’s the potential in these jobs to make a fair amount of money, but there is an expectation that people will work hard for it.
The fourth criteria here – this is not the case in all investment banks – is that you have to be a little bit entrepreneurial. Not a lot – because I do believe that true entrepreneurs take entrepreneurial risk, and real risk is the risk of losing your business. That’s real risk. It’s not risk as to whether your bonus is going to be $50,000 versus $100,000. That’s not real risk.
Right. That’s safety net?
That’s right. We just brought in an analyst, he gets a real salary. But the size of his bonus is most definitely based on how we do as a firm, and he has an opportunity to more than double his pay if we do well. But if we don’t, he won’t. It could be a pretty big potential swing.
To the extent people are looking for a greater degree of security, they should go to a larger firm, probably, that are in theory more stable. We’ve been pretty stable the last three years, but I always know there’s the potential in our firm that we could wind up going a year with no deals. Fortunately, that hasn’t happened, ever, but that potential exists. We could wind up having a year of no deals. And if we have a year of no deals, people are going to get paid a lot less. And they’re going to have to be willing to have confidence and stick it out until next year. If we were to not have deals for two years in a row then we’d have a different set of problems.
Next week: Ken Marlin’s views on interviews and preparation.