A steady hand at the helm

comment - 02 June 2015

A steady hand at the helm

In responding, however, we must not be distracted from delivering our core products with skill and integrity for the benefit of our clients. By achieving both, we hope to avoid the difficult choice between Scylla and Charybdis.

In Greek mythology, Scylla and Charybdis were both monsters that lived on either side of the narrow strait of Messina and sailors would get caught by one attempting to avoid the other. Scylla was a monster with six long necks equipped with grisly heads, each of which contained three rows of sharp teeth. Charybdis, cursed with a huge bladder, had an uncontrollable thirst for the sea. Her large gulps of water created massive whirlpools that could swallow ships whole.

In our industry, Scylla represents a multi-faceted business always looking to add profitable new services organically or by acquisition: different fund types, assets classes, industries and new service lines. Service lines themselves can be divided and subdivided into different units through the creation of ‘specialist teams’: consolidation, IFRS, transfer pricing, liquidation, FATCA reporting etc. Less thought is given to synergy because these businesses are always looking to achieve scale to meet shareholder aspirations. Unfortunately, in growing numerous different heads, conflicts arise as each business unit feeds as best it can from available clients.

In contrast to the hydra-like Scylla, Charybdis represents a true leviathan which naturally swallows business by virtue of its market size. These businesses tend to be large, institutional and slow at responding to changing events as controlling risk takes precedence to client service. Top-down control from a remote head office stifles initiative, leaving local staff ill-equipped to deal with the challenges presented to them, resulting in constant market decline which is off-set periodically by strategic acquisitions. The leviathan suffers from a disproportionate cost base that is balanced through increased functionalisation and outsourcing. These are often unhappy businesses.

Navigating between these two dire fates is not as easy as it seems as Scylla will aggressively target the market and Charybdis will positional itself in the more risk-adverse institutional sector. We must hold the course, therefore, by focussing on the Big Picture:

“Aztec Group has been pushing the boundaries in fund and corporate services since 2001 with dedicated client teams, leading-edge technology and a focus on alternative strategy asset classes”

and winning the argument through better service provision and price transparency. We hope that peer recognition, such as our success at the 2015 European Private Equity Awards, validates our distinctive brand message.

Ultimately, we exist to facilitate alternative investment, simply, efficiently and predictably in a cross-border context, notwithstanding a cascade of change. New services may be required from time to time to accommodate such change, but these new services should be seen as ancillary to our core product: helping clients establish and operate alternative investment structures. Our success in the future will come down to our determination not to deviate from the course that we have set.

 

previous comment / Edward Moore

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