The interview: Mark Pesco

With rapid growth, M&A integration and a global rebrand, Mark Pesco has had a busy first 12 months as Group CEO of IQ-EQ. Year two, he says, will be all about demonstrating that the team has built a “resilient, sound and successful business”

What’s your background and how did you get to where you are now?

I’m from Jersey originally. I was born and schooled there before going to the University of West London to study Business Studies. After uni, I went back to Jersey and did my training contract to qualify as a chartered accountant. 

I’m basically a failed musician. I love jazz and used to play the saxophone, but quickly realised that I wasn’t good enough to make a living from it, so I tucked my pipe dream away, got serious about my career and chose the accountancy path.

I was in practice with PwC for 10 years and I spent lots of time overseas with them, in Singapore, Australia and London. When I decided to leave practice, I joined a small private client trust business in Jersey as a Partner. I’d always wanted to run my own business, not only for the personal challenge of seeing if I could do it, but also for the opportunity to make decisions with a team and revise those decisions if we got them wrong.

I’m not sure where that entrepreneurial desire came from. My dad’s had restaurant businesses. He and my mum are from very humble backgrounds and they have a really strong work ethic. Running a business can be exhausting, but their example keeps me grounded and keeps me going.

Tell us more about joining the trust sector.

There were three of us as shareholders in the business and we grew it successfully together. Unfortunately, one of the shareholders passed away very suddenly and that led us eventually to sell the business to the international division of IFG Group, which had set up in Jersey for an acquisition about three or four years previously.

I oversaw the integration of the two businesses and then they asked me to be MD of the Jersey operations, which we grew successfully from 60 to 100-plus people. 

In 2012, I was one of a handful of the leadership team that went out and got private equity backing for a management buyout. Essentially, what we did was acquire the international division from IFG. 

At that point in time, there were about 220 people across five locations. The first thing we did was rebrand the business as First Names Group and I was fortunate to later become its CEO. We totally transformed the organisation, growing it from 200 to 800 people and trebling the size of the business financially.  

At the end of 2017, I led the sale of First Names Group to SGG Group, which we later rebranded as IQ-EQ. There were lots of reasons for the sale. Primarily, when you looked at First Names Group, it was predominantly a private client business looking after family offices and ultra-high-net-worth individuals.

SGG at that point in time was principally a corporate and funds business. First Names Group’s presence was heavily concentrated in the Crown Dependencies, while SGG was predominantly located in Luxembourg and the Netherlands. 

In my mind, if we talk about how the market is changing, it made perfect sense. Overnight, we created a global business. We then cemented our position as one of the top four global players following the acquisition of fund administration specialist Augentius in the second half of 2018. And then we started to diversify our business to offer a greater array of services across what I see as the three core service areas: funds, corporate and private wealth. 

What’s driving the shift towards becoming a global player?

Wealth has become much more globalised. Clients need players like us to structure them globally, giving them a consistency of service and approach, so that they don’t have to use 20 different providers. 

The other reason is that unless you are of a certain size, there are barriers to coming into our market and continuing to evolve. Unless you can invest in people to deliver compliance, learning and development, finance, IT and new products, you can’t compete.

I see the market in three ways. There are the global players, of which we’re now one, who are providing more than one product offering and are located globally. You’ve then got the regional players that usually operate in one or two key geographies and offer one or two products; so either corporate or funds or maybe a combination of the two. And then you’ve got the boutiques. 

Boutiques, which offer a very specific service, will always have a place in the market. I think the regional players will either be bought out by the global consolidators or they’ll try and move into that space by coming together. Ultimately, we’ll be left with a smaller handful of players in the market.  

So you think that regional tier will eventually be taken out?

It’s probably a bit provocative to say so but I think it’s highly likely. Regional players need to continue to show evolution in their growth and their profit. One of the ways you can do that is through acquisition, as we have done.

What does that mean for clients who are too big for the boutique firms but not big enough to appeal to the global players?

Because of the way that we’ve grown – organically and through acquisitions – the culture within the organisation is very entrepreneurial. It’s about finding a reason why you can do something as opposed to why you can’t do something. We take that approach with clients. 

So, yes, we operate at the top end of the spectrum in terms of the clients we deal with, but we also work with very entrepreneurial clients where we believe we can grow with them as they build their wealth.  

Also, smaller clients tend to want a bespoke service tailored to their specific needs, which is what IQ-EQ is all about. The way we differentiate ourselves within those top four global players is through our absolute focus on the director- and team-led approach, which means the senior people who pitch to you will be the same people who look after you through the lifecycle of your relationship with us. 

We’re not offering a commoditised, system-driven approach to what we do with our clients, so it doesn’t matter whether you’re large or small; the approach we take is exactly the same.

In a nutshell, what does IQ-EQ do?

We’ve labelled ourselves an investor services group, which essentially means that we set up and administer investment structures for our clients – whether they’re in the funds, corporate or private wealth spheres – and we do this in a highly compliant and sustainable way and on a global basis.

Whether you’re a family office, an ultra-high-net-worth individual, a multinational company or a fund manager, we help to run your structures.

As you mentioned earlier, not long after SGG’s acquisition of First Names Group, the company rebranded as IQ-EQ. What was the thinking behind this?

During the past 12 to 18 months, we’ve tripled our headcount, predominantly through acquisition, from 800 people to 2,500 people operating across 23 locations. With that comes a lot of integration work – and for us it’s not just about numbers and processes; it’s also about cultural integration. 

One of the things that I needed to do when I moved into the Group CEO role in January 2019 was to unite everybody within the business behind a shared vision and identity. That’s why we rebranded.  

Why did we go for something like IQ-EQ? First, it’s a bit modern and a bit different for our space. But, importantly, what it portrays externally is also true of us internally. A key driver for this brand is that clients in our industry expect you to be able to provide them with technical excellence – the IQ.

But what makes us different, and what our clients really want, is the ability of our people to work with them over a long period of time and build that relationship – that’s the EQ bit. 

We spend a lot of time within our organisation focusing on emotional intelligence, both in the recruitment process and as part of our learning and development programmes. That’s the philosophy behind the brand.  

We went through a massive consultation process internally to arrive at IQ-EQ. Alongside consulting key clients, we ran employee drop-in sessions in all of our locations, as well as focus groups, interviews and a global survey. 

There was lots of staff input on what made us unique as an organisation and, actually, it was the people, the high degrees of interpersonal ability, the flat hierarchy – all of that kind of stuff. The IQ-EQ brand came as a natural evolution from asking our people what made us different. 

And I’m pleased to say that the reaction to the brand, both internally and externally, has been very positive.  

Has the focus on the rebrand led to any sense that you’ve taken your eye off the ball with clients? Are they still feeling loved?

One of the guiding principles I have in the business is that, first of all, you look after your people. If you don’t get that bit right, the client bit just doesn’t work at all. So the focus of our integration programme and our transformation has been on making sure we’re still investing in our people, developing them, giving them opportunities. Becoming a global firm allows you to do even more of that.  

As a result, we have very low staff turnover across the group, so the impact of the rebrand on our clients has been minimal really, as they’re still dealing with the same primary contacts and they’re still getting the same quality delivery as they did before. 

That’s really important to us as being able to retain your focus on people is a challenge as you grow. But we’ve done it so far and I absolutely believe we can continue to do it. It’s about the leadership team behaving and acting in the right way and living up to the values of the business – if we don’t do it, how can we expect anybody within the organisation to do it?   

You’ve talked about growth through acquisition over the past 12 to 18 months. What’s the end goal of the buy and build strategy?

There isn’t an end goal. As a business, we are unashamedly ambitious, so we want to continue to grow. In terms of buy and build, our focus has predominantly been on building a European platform, but we have started our growth journeys in both Asia and the Americas. We’ve built scale in Asia now, with around 550 people in Hong Kong, Singapore and the Philippines. 

Specifically, we want to continue building out our presence in Singapore and Hong Kong because there’s so much wealth being generated in that region. We also want to focus on North America, where we have limited presence at the moment but where there is significant room for growth.  

Beyond the drivers of wealth generation and macro conditions that are presenting us with opportunities to grow organically into new geographical areas, the fact remains that our sector is still very fragmented, so the opportunity to continue to buy and build and create value is still there.

Are there any ambitions to see that number four ranking get higher?

For me, it’s not about becoming the biggest; it’s about building a really successful business. If that ends up making us number one in terms of size, of revenue and of profit, then so be it. But, first and foremost, it’s about building a global business that can deliver quality service to our clients and create a culture for our people that they want to be part of.  

Integration is often where M&A deals fall down. How are you getting this right?

If you look at the experience we have as a leadership team, between us we’ve done something in the region of over 30 deals in 15-plus years. That’s a lot of M&A. We’re very disciplined in our approach to acquisitions, from the way we go out and develop relationships to the moment we sign on the dotted line. 

When we get to integration, we’ve got a very clear methodology we use time and time again. It’s not just about financial integration; it’s about people, IT, operations, risk and compliance. We spend a lot of time on the softer areas of integration as well. 

We give people change training when they come into the organisation. We explain to them how they’ll feel as part of the integration process and that they will go through an emotional lifecycle. And, most importantly, we communicate and tell people what’s going on. This methodology is why we’ve been able to grow through M&A at the pace we have.  

The other thing is that we made a lot of investment into the business at the time that we were acquiring and integrating. 

For example, we’ve invested a huge amount in technology and brought on board a new CIO at the beginning of last year. We’ve set up a management information team to generate information to help us manage the business in a better way. We’ve beefed up our operational teams. We’ve enhanced our existing systems. So, in other words, you don’t just acquire a business and then bolt it together; you’ve also got to change the organisation to fit the size that you’ve become and to build enough capacity and structure so you’re fit for the next phase of the journey.  

The group took on private equity backing in 2016 from Astorg Partners. How supportive has it been of your strategy to invest ahead of the growth curve?

Had we not had private equity backing, we would never have been able to grow and globalise the business. We wouldn’t be able to invest in technology or in the development of our people. 

So, for us, it was the catalyst that allowed us to build and accelerate the growth of our business. We want to demonstrate to the market that, having brought together three large businesses – SGG, First Names and Augentius – we can continue to grow organically. Astorg is very happy to keep its shareholding for as long as we all feel we’ve created the type of business that we want to create.  

Where do the Channel Islands fit into your growth plans?

After Luxembourg, Jersey is the second largest office in the entire group; there are almost 300 people now based there. Guernsey and the Isle of Man are also sizeable businesses.

The Crown Dependencies are still regarded as very high quality, highly regulated, solid jurisdictions with well-established law and high-quality practitioners. So they continue to play an important part. Whether or not we want to grow those significantly more will depend on future opportunity not only for M&A but also for organic growth. But the islands are a key part of our footprint and we don’t see that changing.

What sector trends are you witnessing across IQ-EQ’s core segments?

There are two things. First, globalisation’s going to continue and we’re going to see further consolidation in our marketplace, to the point that we may see a real rationalisation – in the way we did with the large accountancy firms. 

Second, one of the biggest opportunities in our sector is the use of technology and whoever really gets that right will win the prize. Our industry has for some time been the perfect environment for innovating technology to create greater efficiency and allow people to focus more on adding value. 

We’re making massive investments in enhancing the overall client experience by making the onboarding application process easier, giving clients access to their data through online portals, and so on. Internally, we’ve already automated a significant amount of our processes and our procedures – automating bookkeeping processes, for example. We’ve also created a tech innovation team, which many players in our sector haven’t done yet. 

But we will see a significant investment in technology from lots of players in our sector to transform the way in which we as an industry have traditionally worked. This is going to be crucial if we’re going to keep up with the demands of the younger, more digitally-native workforce that we’ll be recruiting in the future. 

You’re now several months into the new brand. What’s the next stage of the growth journey for you?

We’ve been very active and very noisy through M&A and the rebrand. The focus for us now is on making sure that all of that M&A and the subsequent integration work bears fruit. So our acquisition strategy will be more limited than it has been over the past 12 to 18 months. We’d like to see our organic growth continue to be above the market growth rate, demonstrating that we’ve built a resilient, sound and successful business.    

You’re a big fan of mindfulness and meditation. How did you get into this?

Everybody has really busy lives. I’m travelling constantly and dealing with so many different demands. Mindfulness is one of those things that I discovered having met somebody who had helped quite a few people learn it. 

They were quite evangelical about the benefits it could bring in terms of coping with stress, patience, being more grounded, being more authentic. The more I started looking at it, the more I thought, I’ve got to have a crack at this. I was fortunate enough to find an amazing teacher who had studied Chinese meditation for many years. People have different things they do to relax. I love sport, but I think mindfulness gives you a very different perspective; it keeps you grounded. For me, it creates huge amounts of patience and a huge amount of energy. 

I’m a big advocate of it. I think it has the propensity to make not only the workplace much better but individuals perform to the best of their ability because they’re able to cope with a whole plethora of things that life throws at them.