Comp and Circumstance: Ernie Perez Discusses Alvarez & Marsal's Acquisition of Denver-based Compensation & Benefit Solutions

Perez: First it grows the practice in terms of having additional clients. One thing we do a lot is cross-selling work at A&M. With their client base, their skillset allows us to expand our offerings to other markets but also allows us to then bring our other services into their client base as well. It's adding more qualified skilled professionals, adding more clients to our client base but also allowing us to do more cross-sell across our other service lines.

Consulting: How important was the cul-ture piece in driving the acquisition?

Perez: Culture is probably the single biggest factor. When you sit across somebody and say can we work together, that's very important. That was something that takes time. In any acquisition, this is the second we've done, the common denominator has been spending the time to get to know one another and making sure we can work together. In terms of culture, A&M, although we've grown from a couple hundred people to 3,000, as we've grown we've kept that entrepreneur spirit. We're not micromanagers, we're not people that are going to be looking over your shoulders. The reason we go for a firm like C&B is they've been successful. The last thing I'm going to do is try to change things and try to put a square peg in a round hole. That culture is a big part of it, making sure we can work with one another. For every C&B there were four or five different prospects we talked to that we haven't moved forward with because culture wasn't a good fit, not only from our end but also their end. It goes both ways in terms of culture fit.

Consulting: What are some big issues compensation and benefits issues clients are facing?

Perez: Executive compensation continues to be a very hot topic. If you go into compensation and benefits together, the last 10 years has seen a boom for that market given all the new regulations, the scrutiny that has come out in terms of the press and executives being run through the mill in terms of how much they're making, bonuses, etc. It's an area that has gotten a lot more attention and rules have made it more complex. That has really required more focus on this area, not only by public companies but you're also seeing it by private companies. Now you have a few different dynamics, tax reform which could change the landscape, and even when you look at bankruptcies today, compensation and benefits is an important part of making sure when you have a company going through that process they're able to retain the executives they want to reorganize the company. It really plays a part in almost everything we do today. Talent today is hard to come by, there's a war for talent, and how you structure compensation and how you retain your people is a big part of that, whether you're private or public and even in professional services firms. It's become one of those staples you have to address in addition to everything else related to it.

Consulting:  What are the biggest consulting opportunities around compensation and benefits?

Perez: When you look at the market, one area I would tell you has been a very high growth area for us is compensation and benefits in the context of workouts and bankruptcies. Those rules changed a few years ago, the rules were as you went into the courts you had to have a plan on compensation, those rules have tightened and it's created a market unto itself. When you look at A&M, our legacy for the first 20 years it was a workout and restructuring and bankruptcy firm. We're still the gold standard in the space, when you combine that side of the house with some of the changes they've made in code as it related to compensation and benefits we're seeing a lot of opportunities in that space because executive compensation is top of mind, and you have to conform to those rules today. The other part that I think will continue to be active is executive compensation, getting plans implemented and making sure your plans are still up to par with the competition.

Consulting: Where are you looking for future expansion or growth? 

Perez: The first geographies we're looking at are places where we already have a presence. When you look at the New York and Northeast corridor, we're looking very intently there. Out in the west coast, we recently did a transaction there in Silicon Valley, which is a dynamic market. We're looking at how we can continue to grow there. Others include the Texas market and the Southeast, those are the markets we're looking at. But again, we tend to be very opportunistic, we might not be looking in Philadelphia, but if we come across something there that fits with our skillsets and the culture and values it's something we'd be willing to look at. It needs to be something we can leverage and grow and whether there other divisions there within A&M where we see synergies. That's sort of the strategy.

Consulting: What are your goals for the Compensation & Benefit acquistion?

Perez:  My hope is it does a couple of things. First leverages our skillset in that space, allows us a lot  more geographic expansion and also allows us to deliver consulting opportunities. When you combine all that I think we're probably going to be the premier non-accounting professional services firm that will have a first in class compensation and benefits practice. That's where I see this going and I hope we're a long way there already. There's no other practice like Compensation & Benefit around that has a national footprint. We were fortunate to get them and the idea there is to be a top-ranked compensation and benefits practice.