Episode Transcript
[00:00:04] Speaker A: Welcome to Cafecito, a podcast dedicated to fostering connection and empowerment within the Hispanic and Latin American community.
[00:00:17] Speaker B: One of the first things when I started interviewing with a M that everyone mentioned to me was how entrepreneurial it was. And it was interesting because as I've been at the firm now for almost two years, folks have continued to say that like you have. I mentioned to you that when we heard Tony speak and we heard Tom speak and everybody else, they said they were all saying the same thing. Is that something that happened because of the way that the firm started, or do you think it's something that you guys really intentionally tried to maintain throughout the years to be able to keep that spirit at the company the whole time?
[00:00:53] Speaker C: It's Tony and Brian, no doubt about it. I think that that was the culture that they came in mind with, and that's the culture that they have basically instilled in all of us. And I think if you were to hear Tony, he would tell you that one of the reasons why we've been so good is because of the consistency we've had at the leadership team, knowing each know, being able to call each other and just the lack of bureaucracy. Right. So if I need something, if I have an idea or something, I can call Tony and take care of it in five minutes. I might not get the answer I want, but I'll get it resolved in five minutes. So I think that certainly comes from them. They instilled it, we appreciate it as leaders, and then we try to instill that in all of our folks. So they're the ones that really deserve the credit for instilling that and keeping it here and making sure that we're not the, when he does the reviews with division heads or Brian, one of the things they're trying to make sure is that you're not creating bureaucracy. Make sure that you keep adhere to our core values and our principles, and they do a very good job of doing that.
[00:02:05] Speaker B: That was a great answer, too. Since we're recording it, we can always show them later that, hey, Ernie's consistent with the message. Right?
[00:02:11] Speaker C: I knew that beforehand.
[00:02:13] Speaker B: Yeah. Do you think that's going to be hard to maintain? Let me rephrase that question. How hard is that going to be to maintain? And how do you see us maintaining that as we continue to get from 100 million to your point to north of 3 billion?
[00:02:26] Speaker C: Yeah. Listen, it's the biggest concern or challenge that we think we have is as we continue to grow.
If I go back to the global leadership meeting we had earlier this year. With all the global leaders, we feel pretty comfortable that we can probably double in the next three or four years. And that doubling, a big chunk of that doubling will come from folks that are coming up the ranks. But also to capture that opportunity, we're going to have to need external hires. So how do you hire folks that share the same core values, share the same principles? So managing that is very important for us. I got to tell you, from 500 that we were when I started to 6500 today, I don't feel much of a difference. I still feel that we're nimble. I still feel that we can execute really quick.
By definition, you got to have more infrastructure, right? Because more you grow, you got to have some bureaucracy. Bureaucracy is a bad word, but you got to have some bureaucracy. So it's balancing that bureaucracy with the growth that really is our biggest challenge. I think you can do it.
We've been able to do it, and I think we've been able to do it because we've kept the structure lean. I mean, we're not creating layers and layers of processes that we got to go through, but certainly it becomes more challenging. And you got to put some rigor behind the organization, especially when you're going, listen, we just opened up an office in Australia, Vietnam, Indonesia, Malaysia, and Colombia just opened up. You're, you're, you're growing, so you need to have some rigor to make sure that you maintain that.
[00:04:02] Speaker B: It almost seems like, though, to your point, you want to be just a little bit below, a little bit, always a little light on the bureaucracy. Right.
[00:04:08] Speaker C: Catching up. You're always catching up.
[00:04:10] Speaker B: Yeah, exactly. Great. So I want to come back to Miami. While we talked about the beginning for a little bit, recent article shows that Miami's venture capital pipeline has grown 400% in the last year, and today it's being called the number one place in the world for tech job growth. What's it been like for you being in Miami watching this since 2020? And since we know some people may know, Mayor Francis Suarez has had a big part of that. COVID is a part of that, and I want to love to hear what you've been seeing.
[00:04:42] Speaker C: Yeah, no, it's been a great story. Watching it and living in it. Now, I don't know if you saw the article that came out, actually earlier this week on Bloomberg, on Ken Griffin. Did you see that article?
[00:04:54] Speaker B: We were talking about it last week, but I didn't read the article yet.
[00:04:56] Speaker C: Yeah, so the article came out, Ken Griffin talking about him and his view of Miami becoming Wall Street South. Right. But I think going to your direct question, I'll share the article with you, and you can share with the was Miami had always been a place where flight capital came, right. But it wasn't permanent capital. It started changing, even pre COVID. You started seeing, for example, the tech, the tech hub that was really being created here in South Florida.
Now, it had its challenges because you didn't have the infrastructure. Right. You didn't have the talent that you were seeing in Silicon Valley. The financial, the banking, the BC type of banks weren't around. But you certainly saw that. And you saw also some of the migration of folks coming down from up north and making mammy their permanent place of residence. That picked up tremendously during the COVID period. Mean, listen, you got, Steve Cohen mentioned, Ken Griffin, you have Founders Fund right here now. So you're seeing folks advocate, this is the place to be. And it's not only Miami, it's Palm beach, it's Boca. And it's for a lot of those, basically South Florida. You're seeing the law firms, Kirkland, Ellis, Winston and Strong, Silly Austin, Major Law firms that have never been here, opening up basically their offices here. So the question that people keep asking, is it going to last? Is it permanent? And unlike any other time that I've seen Miami sort of prosper, I have a different feel for it here because it's going into infrastructure. You're seeing the talent come down here.
You have those folks that sort of push against it because it's changing too rapidly. But I think in terms of what we're seeing today, it's pretty amazing. Pretty amazing in terms of the opportunities for firms like ours, opportunities for tech to be a big part of this economy.
Asset management, hedge funds, private equity.
Toma Bravo has basically moved down here as well. So, I mean, it's just pretty incredible to see it.
And it was a favorable, the, I forget who it was that Mayor Suarez basically said, how can I help you? Right?
And that tweet, he had the socks.
[00:07:19] Speaker B: That say, how can I help you?
[00:07:20] Speaker C: Yeah, how can I help you? And that's sort of the mantra here. Come down. How can I help you?
[00:07:25] Speaker B: Yeah, so Miami has always been a hub for Latin America in terms of like a portal into the US. How do you see that or not working? Know this, I want to use this term lightly, but it's funny, you hear it a lot. Is the tech bros. Right, which is like the California type of that product versus maybe more of the imports and the kind of more South American things you see, how do you see that or not see that?
[00:07:56] Speaker C: You're right. But Miami was always more of the regional offices here. You never had your headquarters here. So now you are seeing these funds, these asset managers established. So that's a big part of it. And Latin America by default, because of where Miami sits, is a direct link with that. Now, what I'm seeing right now are a couple of things from an inbound perspective coming into the United States. I think we're all aware of everything going on in Latin America. I mean, geopolitically, you see the elections in Colombia, you're seeing what's happening in Ecuador, Peru, Brazil, Mexico. You're seeing the United States continues to be probably the safest place to put your money in. So you're seeing a lot of capital inflow coming here, and that's creating a lot of opportunities for us. I mentioned to you that we recently hired in tax Alfonso Bayete, who was the head of KPMG's Latin American tax practice, and he joined us and moved down to Miami. He was in New York. And so Alfonso is building a team and really tapping into those opportunities. So we're seeing a lot of influx here.
By the same token, there was a great article today about the increase in sales in EV cars in Brazil and in Latin America. But the infrastructure needs that you need there. So I think that Latin America, when looking at to invest, even though it's going through these cycles right now, you're still going to see opportunities, especially for firms like us. Right. Because there's going to be a lot of workouts, a lot of trouble, but also a lot of opportunities to pick up clients that are picking up potential targets in jurisdictions. And then you have the infrastructure space, which I think is really a strong space in Latin America.
I say that with one caveat, depending on how far these geopolitical shifts occur, that could certainly have a really negative effect. Right. So I think that's something to keep in mind, but I think it's primed for a lot of opportunities both outbound going into Latin America as well as inbound. And I think Miami is going to play a huge role in that process going forward.
[00:10:09] Speaker B: Yeah, that's interesting that you mentioned EVs, because being in automotive practice, that's near and dear to my heart. Right. And it's funny that you mentioned that because one of the challenges is price and distance have been achieved, really with the cars, but the charging, which is tied to the infrastructure, to your point, is still their one big variable that they haven't been able to get a hold of.
[00:10:26] Speaker C: That's right.
[00:10:27] Speaker B: So if we stick with that theme that you were talking about, what are you seeing just more broadly then in global markets? Post COvID? I know you said obviously the big concentration of business for a M tax is going to be in the States and in Europe, but I know you have a pulse on everything else that's going on. What have you been seeing macroeconomically?
[00:10:46] Speaker C: Yeah, on a macro level? Well, if you look at it from our business, for example, M and a private equity, until recently, it has slowed down now, especially with the Fed's increasing rates. But it's been really just going gangbusters ever since the summer of 2020. We haven't stopped. I mean, if you look at the numbers that are a transaction advisory practice or a PEPI practice and our tax M and a practice, it's just unbelievable. I think that's going to slow down a bit because of just the way things are.
I think restructuring is, they're chomping at the bit for 2023. I think they're salivating at what this could look like for them in 2023. And then corporate spending could slow down because of interest rates. But from a geopolitical perspective, I don't know if you followed what UK just did. They just passed a new act which is meant to really stimulate demand in the UK with lowering taxes, trying to stimulate the economy. So each country now, Germany, France, Italy, the major players, the G seven, they're going through their own internal struggles and they keep changing things. And by this, it creates a lot of uncertainty for our clients, which actually, believe it or not, helps us in helping them navigate through this uncertainty, because a lot of our clients today are going through rapid change, as you know. And so the transformation is really happening at a quick pace. And at the same time, most of these jurisdictions, these countries, are changing a lot of their policies. So we're seeing a lot of activity from clients that want to understand what are the ramifications if this policy were to go through in the UK or if this policy were to go through in Germany, or if this policy happens in Latin America. So a lot of geopolitical mean, if you look at the forecasting, Europe doesn't look gOod. We're talking about stagflation in Latin America for the most part. So I think that your guess is as good as mine as to whether this is going to be a soft landing, hard landing, medium landing. Keep talking about that. But a lot of uncertainty and geopolitical issues really around the world.
[00:12:58] Speaker B: It's interesting that that's one of the great things about consulting, is uncertainty for everybody else usually translates into certainty for us. That's right. But especially for us because of restructuring. Right. I've heard a lot of people at the firm say that our restructuring practice is kind of our secret weapon because a lot of the restructuring that's done is done by more boutique ish firms. And so bigger firms can't pivot to that kind of work when the restructuring work comes. Right. They just have to cut and strip.
[00:13:25] Speaker C: There's no firm out there. There's no firm out there. Whether you look at the big four or whether you look at the MBBS, there's no firm out there that has the perfect hedge that we do during good times and not so good times. And then the beauty of it is that restructuring during bad times, there are stuff that the rest of the practice can piggyback off of that. Right. Because you are unwinding companies, you are selling pieces of companies. So that brings your transaction advisory, it brings your tax, it brings your corporate consulting.
And then the focus the firm undertook over the last five years, focusing on industry, right.
Your automotive, industrial consumer, I think that's going to bode very well as things continue to.
[00:14:12] Speaker B: They're, they're very, Tony and Brian have been very strategic as they've set up those different verticals.
So in terms of preparing for the future, I talked about this a little bit last week. How do you see young talent? And by young, I would know, let's say early career, five years or less, as well as Hispanic talent, which would be all levels as target demographics for recruiting. What is the value you see in each of those? Maybe separately?
[00:14:38] Speaker C: Yeah, listen, young talent, when we look at our strategy, you have on campus recruiting and you have experienced recruiting. And it might differ a little bit among division, but it's critical, I think, for all divisions. And certainly it's a big part of our process. Now, I think the challenge we have with everybody else is onboarding these individuals, but making sure how do you develop their careers? How do you make sure they stay here and how do you make sure they progress?
With respect to Hispanics, my personal view is I think we do a decent job of recruiting them from school. I think when you look at over a long period of time, they start falling off during the process. I think we got to do a better job of making sure they see a career track here, that they're motivated and can stay. And I think that's something that certainly on our part, and it's not Hispanics only I can say the same thing about females. Women. So I think there's a lot things that we can do better to make sure that we keep them here and we work with them on their progression going forward, because we do a good job of bringing them to the door. I think we got to do a better job of keeping them and working with them as their career progresses.
Yeah.
[00:15:55] Speaker B: And that's something that HLA would love to be a part of, so hopefully we can continue to do. You know, we were talking about secret weapons. That's one of the things I love about HLA is that a lot of us speak other languages. Right. So that's kind of like our little secret weapon is our ties to Latin America and the different countries.
[00:16:10] Speaker C: No, I think HLA, as well as other resource groups, are a huge part of working with the talent that we bring in experienced hires, as well experienced hires that keeps them here and helps develop them over their career.
[00:16:27] Speaker B: Yeah.
I dug up another interview from one time, and you said that recruits have to have integrity, passion, and intelligence. And I wanted to ask you, are those in order on purpose and why?
[00:16:40] Speaker C: Yeah, I think when you look at our business, it's all about our reputation.
We're not manufacturing a widget and managing a product. I think that it's all about your integrity, your reputation, and I think that could be lost very easily in our world.
Same way I tell my kids.
One thing could really set you back tremendously. I tell our people, as well as that a lot of our people are dealing with confidential information.
They're dealing with things that, if left to a different mindset, could be used in not a very ethical manner. So I think integrity is huge. I mean, you see it today when you think about a M and people talk about Tony and Brian. I think they've created a firm where they have tremendous following because of their integrity and the reputation that they build over time.
Passion.
I don't know how you do this. Believe it or not, September 16 of this year was my 30th year anniversary of getting into this profession. I walked into those double doors at Arthur Anderson on September 16, 1992. Okay, to do it as long as, to me, you have to be passionate at whatever you do, and you have to love what you do. And I think one of the things that I've enjoyed over my career has been it's challenging, it's demanding, as we all know.
[00:18:15] Speaker A: Right?
[00:18:15] Speaker C: We got to travel and everything else, but each client is different. You meet different people, the connections and relationships. So you got to have passion in what you do and then the mindset has to be of, to me, you have to have that mindset of solving problems and working things. That's how we add the value. So that ability to think. I always tell people it's okay to bring me a problem, but I want you to bring me potential solutions, even if those solutions are basically far, if they don't make any sense. I want to see that you thought about how I break this down and solve the issue. So those, to me, are sort of the critical. You have other ones like emotional intelligence and everything else. But I think that problem solving mindset and passion tied with integrity. I think if you think of every successful professional you see out there, I think you'll see all three of them in them.
[00:19:12] Speaker B: That's great. I only say that because a lot of people would think, oh, well, intelligence should be first. Right. Because you have to know what you're doing. But I love that explanation of the order. Okay, I got one more quote for you, and then we're going to turn over some time for folks on the call to ask questions. But this is a quote I have from you. A good partner is one that makes partners. You want to comment on that?
[00:19:34] Speaker C: Absolutely.
I learned that very early on in my career.
There's nothing that gives me the most pleasure than seeing our people grow. And I grew up in an organization where stewardship, in other words, leave the organization in a better place when the time comes for you to leave and you can't do it overnight. So you got to build it. So I think that a sign of a good partner is one that has made partners because I think in doing that, there's coaching, there's mentoring.
Selflessness, because you don't make partner unless I think some selfless because it means you're making a partner to be accretive, but at the same time, you're giving up something.
And so I think that.
Feel very strongly about that, that a sign of a good partner is one that makes partners.
[00:20:34] Speaker B: Same with the intelligence. Right. You would think sometimes a good partner is one that just beats everybody up.
[00:20:39] Speaker A: Right.
[00:20:39] Speaker B: You don't think about lifting others.
[00:20:41] Speaker A: Right.
[00:20:41] Speaker B: It's counterintuitive.
[00:20:42] Speaker C: Yeah.
[00:20:46] Speaker A: Thank you for listening. Make sure to subscribe to Cafe so you never miss a new episode. Also, visit our website, Alvarez and Marsal.com to learn more and to connect with us.
