Description
June 30, 2015
There’s a lot of value in being able to offer
different money managers, different levels
of service based on their sophistication and
their willingness to invest in that business.
Q: Pete, you had mentioned that
you hadn’t actually gotten there as
far as the vision. I’m just wondering
what you mean by that.
HESS: For a large number of our clients,
we can’t run their back office for them as a
standalone company.
We do it for advisers and wealth management
companies but we don’t do it for hedge
funds and we don’t do it for traditional asset
managers. So, we’re not able to offer that
to them.
We have many clients who are in that
business. They use our tools to do that …
they’re service providers.
But, for us, we want the relationship with the
client, really, as much of it as we can and
to grow our business.
We’re lacking those capabilities and the software. There’s a functional footprint that you need to run on at an investment management company. Half of that functional footprint, Advent addresses. We really want our clients to have the best tools within that functional footprint that we’ve earmarked as being what we should be doing.
But we’ve been slow to get to the place where we’re offering the absolute best tools for all those capabilities. SS&C has those best tools, so we can plug them in and we’re there. The gap between the vision and where we are is a combination of services that we don’t offer and products that aren’t yet mature enough to be the best. Q: There was mention that this acquisition was discussed before. Was there something that sealed the deal this time around? Was there a particular aspect about it? STONE: I think $44 and quarter. It’s amazing how money talks. HESS: I said in the meeting this morning we dated for a while before we decided to get married. You needed to go through that journey.
It was when [SS&C] bought GlobeOp and became a customer, our biggest customer and a great one. We had this really good relationship that started to cultivate. Then it was like, ‘Okay. That’s comfortable.’ I see the benefits of pulling this together. And then as Bill said, $44 and 25 cents. STONE: Also, the scale that we bring to the table is a lot different.
… What we found is that our ability to combine the service level with the technology is such a gigantic revenue accelerator. … You move away from a license and a maintenance or even a term license to a basis-point charge based on AUM [assets under management] and service level. You may take our list services. You may take our compliance services.
You may take our hosting services. You may take our data services. You may take our financial statement services.
You may take our footnote services. You may take our taxes. Almost everyone takes our NAV [net asset value]. You might take our regulatory solutions business. The client wants these services and so your ability to have a $20 million client, a $30 million client is vastly enhanced versus in a license business when you get Bill Stone a $5 million license — that is enormous. Then you get 20 percent maintenance generally on those kinds of things.
That really means you get a $1 million per year versus $20 million. At the end of fine years — we’re all very good at math — in one instance you got $5 million and the other instance, you get $100 million. It’s unbelievable how it changes the math. Q: Pete, what more do you want to do for the company? Do you want to just take your money and retire? HESS: I think my wife wants that, but, no, I’m going to stay. … It’s just fun. When you’ve got a winning solution in anything you’re doing, why would you walk away from that? I’m loyal to the employees.
I’m loyal to the customers. I think there’s a lot of really cool stuff that we can do. I think SS&C is going to be extremely successful.
You want to be on a winning team. I like this industry. I love what I do. No, I’m not going to retire. STONE: He’s also the architect of this deal.
A lot of times, the architect would like to see the building get built. http://www.ftfnews.com/news/qa-its-amazing-how-money-talks/ This reproduction is licensed via the CLA for a single reader use and should not be forwarded. The content is the copyright of the publication in question and the publication should be contacted regarding further reproduction, forwarding internally or to third parties. NLA licensed copy. No further copies can be made except under licence Financial Technologies Forum LLC.
Copyright 2015. To subscribe, please visit ftfnews.com or call 646-395-6340. For more information about reprints please contact info@ftfnews.com. .
We’re lacking those capabilities and the software. There’s a functional footprint that you need to run on at an investment management company. Half of that functional footprint, Advent addresses. We really want our clients to have the best tools within that functional footprint that we’ve earmarked as being what we should be doing.
But we’ve been slow to get to the place where we’re offering the absolute best tools for all those capabilities. SS&C has those best tools, so we can plug them in and we’re there. The gap between the vision and where we are is a combination of services that we don’t offer and products that aren’t yet mature enough to be the best. Q: There was mention that this acquisition was discussed before. Was there something that sealed the deal this time around? Was there a particular aspect about it? STONE: I think $44 and quarter. It’s amazing how money talks. HESS: I said in the meeting this morning we dated for a while before we decided to get married. You needed to go through that journey.
It was when [SS&C] bought GlobeOp and became a customer, our biggest customer and a great one. We had this really good relationship that started to cultivate. Then it was like, ‘Okay. That’s comfortable.’ I see the benefits of pulling this together. And then as Bill said, $44 and 25 cents. STONE: Also, the scale that we bring to the table is a lot different.
… What we found is that our ability to combine the service level with the technology is such a gigantic revenue accelerator. … You move away from a license and a maintenance or even a term license to a basis-point charge based on AUM [assets under management] and service level. You may take our list services. You may take our compliance services.
You may take our hosting services. You may take our data services. You may take our financial statement services.
You may take our footnote services. You may take our taxes. Almost everyone takes our NAV [net asset value]. You might take our regulatory solutions business. The client wants these services and so your ability to have a $20 million client, a $30 million client is vastly enhanced versus in a license business when you get Bill Stone a $5 million license — that is enormous. Then you get 20 percent maintenance generally on those kinds of things.
That really means you get a $1 million per year versus $20 million. At the end of fine years — we’re all very good at math — in one instance you got $5 million and the other instance, you get $100 million. It’s unbelievable how it changes the math. Q: Pete, what more do you want to do for the company? Do you want to just take your money and retire? HESS: I think my wife wants that, but, no, I’m going to stay. … It’s just fun. When you’ve got a winning solution in anything you’re doing, why would you walk away from that? I’m loyal to the employees.
I’m loyal to the customers. I think there’s a lot of really cool stuff that we can do. I think SS&C is going to be extremely successful.
You want to be on a winning team. I like this industry. I love what I do. No, I’m not going to retire. STONE: He’s also the architect of this deal.
A lot of times, the architect would like to see the building get built. http://www.ftfnews.com/news/qa-its-amazing-how-money-talks/ This reproduction is licensed via the CLA for a single reader use and should not be forwarded. The content is the copyright of the publication in question and the publication should be contacted regarding further reproduction, forwarding internally or to third parties. NLA licensed copy. No further copies can be made except under licence Financial Technologies Forum LLC.
Copyright 2015. To subscribe, please visit ftfnews.com or call 646-395-6340. For more information about reprints please contact info@ftfnews.com. .
