Adam Torres and Bob Marese discuss the Activist Investor Conference.
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Show Notes:
The Activist Investor Conference is taking place in NYC. In this episode, Adam Torres and Bob Marese, President at MacKenzie Partners, Inc., explore the Activist Investor Conference along with MacKenzie Partners’ role in activist situations at public companies.
About MacKenzie Partners, Inc.
MacKenzie Partners is a leading full-service proxy solicitation firm. They provide strategic advice and shareholder engagement services to corporate issuers worldwide. In addition to annual and special meetings,they also specialize in proxy contests and activism preparedness, M&A, corporate governance consulting, stock surveillance, tender and exchange offers, and corporate restructurings.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to mission matters.com and click on Be Our Guest to Apply. All right, so today I have Bob Mai on the line. He is president over at McKinsey Partners Inc.
Bob, welcome to the show. Thank you, Adam. Thank you so much for taking the time and giving me an opportunity to speak to you. All right, Bob. So I’m excited. The Activist Investor Conference is coming up in for 2024. It’s coming up shortly. And I’ve been doing a lot of interviews with individuals that are either, you know, speakers, moderators, panelists, like all of the above and, and really talking about the event and the current state of activist investing.
So first off, hey, you excited for the conference? Very much so I’m looking forward to it. This is actually my 1st time attending and they’ve been kind enough to invite me to be a moderator on a panel. So I’m very excited. Oh, man. So so what you’re saying is they’re putting you to work just like me, right?
Like, yeah, everyone’s got to earn their living and they certainly they’ve been very great. I don’t see it that way. They’ve been very gracious inviting me to participate. So that’s you know, as, as, you know, no publicity is bad publicity unless, it’s on Instagram. Hey, I oh, there you go. No, in all sincerity.
Yeah, I agree with you. Like, they do great work over there deal flow events. And I know we participated in their most recent micro cap conference that was in Atlantic City. And it’s just, you know, quality event. Quality people, the conversations I can say on my end, the interview side has been phenomenal, the guests and everything else.
So it’s, I, I’m sure this event is going to, is going to go off without a hitch and be amazing as well. I guess just to, just to get us started here a little bit further on this concept of activist investing. I mean, you’ve been, you’ve been over 30 years experience in your industry and space, maybe give us a little bit of context for that.
Sure, so I began my journey with McKenzie Partners, interestingly enough as after I had graduated with my MBA in public accounting past the CPA exam was a down market and just had a newborn and needed to make ends meet while I was looking for a position with 1 of the big 4 accounting firms.
And I started working in McKenzie Partners calling center. So I would say. Okay. I’ve actually started in the mail room equivalence, which you don’t hear very often these days. Yeah, I was gonna say I love that work my way up and they, you know, I managed not to get have them jettison me and, today I’m the president of the firm and very a great group of folks that work with us. Most of them been with us for a while and they’re dedicated and I can’t do what I do without the support of the folks, the team at McKenzie who are just phenomenal. What an amazing story and it’s, this is a unicorn situation. I’m going to tell you why, Bob.
Not for everybody, but for the next generation or our current generation, whatever we want to talk about there. They’ve heard these stories about individuals that, you know, grew up through a company and they started in the mailroom and, you know, 30 years later, they’re, you know, they’re running the company or they’re at a certain level.
have to ask from your point of view, just so people can even see what that’s like, like what keeps you. With McKenzie, like they’re on this, this whole path. Like what, what kept you there? Like, cause there’s gotta be something behind it. Yeah. So there’s, there’s a few things, Adam, you know, first off our CEO, Dan Birch one of the founders of the company, phenomenal, brilliant man.
And he always made life interesting all the, and the projects, you know, we’re not making widgets as you can imagine. So, each day we meet different folks, different advisors, different company representatives and. You know, each company is different. Each situation is a little different. The themes remain pretty much the same, but you know, the, the facts on the ground change constantly.
So you’re always engaged and things are always getting interesting. , and the market itself that we’re the space that we’re in has evolved over 30 year time in tremendous ways. You know, not, not even counting the technology. I mean, when I started doing this, Okay. You know, fax machines were in their infancy and I don’t think anybody uses them anymore.
Didn’t have cell phones. We had pagers and, you know, it’s, it was a different world. I mean, the technology alone has just been phenomenal, but it’s, really, as I, as I touched on before, it’s really the group of people that we work with. Yeah. You know, they, they become friends, they become family.
And you know, we enjoy working together and we’ve been successful over this, time, obviously, if we’re in business, 30 years, we’re doing something it’s fun to go to work every day. I look forward to it. Yeah, talk to me a little bit about culture. I’m just cause this, this just fascinates me when, you know, when there’s a stickiness to this, into this story, like talking about the culture.
we focus on a few things. We focus primarily. On taking care of our clients, supporting our fellow advisors, the bankers, the lawyers, the PR folks, the comp consultants, you know, helping synergistically bring forth the best product for our, for our client, ultimately, and for the most part.
For Mackenzie, if those are issuing clients, although we do work on occasion for some activists but not, you know, it’s overwhelmingly leans towards the issuer clients, the corporates that’s that’s the job 1, but. Part and parcel of that, it’s been a culture that we’ve that’s evolved where we take care of each other internally.
We, look after each other internally. We, we are always trying to make the work life balance 1 that. Is recognizes that, you know, as you can imagine, over 30 years, folks started with us out of college, and then all of a sudden they got 3 or 4 kids together, literally, literally together and grew together.
And, you know, I have to tell you, you know, covid for us was the crucible, you know, the early days of covid were scary. Part of our staff were considered essential personnel and they were rock stars and they came in every day. But for the most of us who live, you know, in New Jersey and 1 island area, I live in Brooklyn myself, you know, we were remote and I think as a firm.
was kind of the quickening of our, culture, if you will, in that we. We grew much closer, we would have weekly, sometimes biweekly kind of not even business meetings. Of course, we, we met virtually on business because we were all remote and we were finding our finding our feet on that.
But we, we would have, we would have a wine hour once or twice a week where we would, you know, just for. 35 or 40 minutes get on the call. How’s everybody doing? How’s everybody feeling? Are you taking care of yourself? You’re getting exercise. I mean, and it kind of grew from there. And now we’re, you know, we’ve always been a tight knit group of folks, but we’re even more so now.
And, taking care, at least from my perspective, and it’s, I think it’s, it resonates from our CEO down taking care of our team is job 1. you know, we take care of our clients and we take care of our staff and. Okay. Together, it just, it just works. It just works. And we’re very fortunate and we have very little turnover.
And you know, the folks, you know, I, I think everybody is sincere and when they tell me that they love working with us. Yeah, yeah, well, thank you for sharing that Bob, because like, I. I wanted to go a little bit, I know this whole interview wasn’t supposed to be about McKinley Partners, and we’ll get into it.
Don’t worry, everybody listening, talking about activists, and investing, and the role, and all this stuff, we’ll get into that, but when I meet somebody like yourself, and I, there’s some, there’s some magic behind the scenes happening there, and I’d just like to shed light on it to give yourself, of course, credit, but then all the other people that are part of this team, and that, that are making this happen, because it’s not, It’s not the common story that I feel in the media, like, you know, constantly nowadays, just not what we hear in my opinion.
Yeah, you know, we, we, we, you know, certainly without without the team, you know, there’s, there’s no individual who rises above the job without the team. And, you know, I’m probably not saying that in the best way, but. You know, it’s, it’s not what we do is not possible without the team of folks that we’ve built over the years.
And everyone’s a great contributor. Awesome. All right. shifting a topic slightly here. So, before we get into really Mackenzie’s role, and let’s just say activist situations for a public company, maybe I’ve been, you know, asking. I’m asking every every person that comes on the show that’s participating in the conference just to kind of define what activist investor or what that means to you just to give the audience that, cause I don’t want to assume everybody knows the term and there’s different nuances.
What does that mean to you or, or Mackenzie? Sure, so it’s evolved, Adam, it’s evolved over time. And I would say in this, in this moment an activist investor is someone who takes a look at a particular company and, for better or for worse, believes that there are actions that can be taken that would improve the company’s performance.
Absolutely. The investment for the, for the shareholders maybe, maybe that’s focused on things like maybe it’s focused on. Actions that can be taken to, you know, perhaps spin off a division, put the company up for sale. That’s kind of the, you know, the ultimate thing recapitalization. There are a whole host of things, but ultimately the goal is.
To increase the value of the of the investment, not just for the activists, but for. The investors as a whole and you know, that’s, would say in its purest form and without any editorial around it. That’s what activist investors attempt to do. Yeah. And it’s, interesting when I think about your career and like, I’m like, wow, when you started this ESG, I don’t know if we strung those words together yet.
Have we? No, no, no, no. That’s like, we’re just talking about evolution, right? I feel like we have it. Yeah. Yeah, and when you, when you think about the duration of my, my career, the ESG is not a, is a term that we’ve used probably only for maybe you know, 20 percent of it. Yeah, and I think that this whole evolution of this act.
Just to give my opinion, I mean, I like the direction it’s going, obviously, you know, it’s still really realistically in its infancy, like compared to where it could possibly go in my opinion. But I do like the evolution and just the fact that investors and others are now aware and, and, and at times more empowered just by even having that knowledge of what’s going on.
So that’s why I was really excited to be able to cover this conference and get the get the info out there. Interestingly enough one of the offshoots of activist investors, if I, if I can just interject for a moment, please, please companies themselves start taking an approach where for better or for worse, it’s called, you know, be your own activist.
Yeah, the board and management. Take a look at the company through the prism an activist investor. And you often find that that kind of critical evaluation helps everyone, you know, it may save off an activist investor because you’re doing things that an activist may propose, but also potentially could increase value of the business overall.
So, and that wasn’t something in the early days of activism that you saw. I think this approach now, I think, is, is probably 1 that. has organically evolved and it’s quite interesting, I think, and I want to make sure I’m saying that right? Because I’m going to, I’m going to repeat this again.
Be your own activist. That’s the name of the concept. haven’t heard those that exact phrase. I like, you know, it’s a variation of that. But yeah, essentially, you know, the board and the management get together with their advisors and what if, what if we, what if we did this?
What if we did that? Yeah. What’s lacking, what can we do to improve our governance structure, our business, and, you know, it’s all done through, as I say, the, you know, kind of the prism of what an activist may, may propose if they were to get involved in, in a particular stock, you know, it’s, it’s, it’s maybe it’s a little, it’s a strong phrase, but maybe it’s equivalent to almost like war gaming.
Yeah, I actually like it because, and then, and correct me if I’m wrong, but would you say when I first heard that, I’m like, oh, what this also does is just giving this idea that kind of takes away, like, let’s go to the early days, the, the concept of like, maybe the Hasidic Hostility or the friction or some of those other parts.
It now kind of puts, almost puts everybody kind of on the same side of the table in this case. And it’s like we’re all working towards maybe, you know, that same you know, proverbial good, right? Like, I feel like it kind of gives that disconnect. Yeah, it’s, I think it has the temperature is definitely in many cases lowered where activisms activists are involved in a situation.
I mean, you know, in the past, they may have been referred to as corporate graders, right? Back. Yeah. Like, more hostile definitely a lot more. Exactly. Exactly. And, you know, I think companies recognize that their tone towards their investors and their activists are investors. Is important and and you need to everyone should who’s who invests in a particular company should get a fair hearing.
Now, having said that, not all ideas are the best ideas for some of them. And in many cases, the company’s already looked at something. So if someone talks about spinning off a particular part of the business, maybe a company that maybe for various reasons, You know, that it just doesn’t make sense, but an activist without the benefit of, of having seen the data that’s inside.
Obviously, there’s only so much you can know from the outside without signing an, you may not have the benefit of of of that discussion of that kind of. Input from outside advisors and just access to the raw data that allows you to make a full and fair evaluation of what’s being proposed. Great. So, in this whole, and I know you mentioned that McKenzie’s typically going to be working on the issuer side.
Correct me if I’m wrong on that. But what is the role overall? What’s the role overall in McKenzie when it comes to activist situations for for public companies? Like, what’s the role that’s typically played? Sure, so it depends on the stage that we’re involved. You know, there are companies that we work with that don’t have anything don’t have anyone who.
Is actively. Agitating, but they want to be aware if someone may get involved. So we, conduct a service. That is called a stock watch and our branded services, the central market intelligence, and we have a robust team, great bunch of folks that do that. And what we do is we monitor trading.
On a daily basis in a corporate issue or stock and try to. Determine if there is any activity that for lack of a better word, we would see as being untoward. So with someone accumulating stock. And with the idea to develop a toehold and eventually become an activist in that stock, perhaps putting forth board candidates in an annual meeting, calling a special meeting, or we’re just in the public space, you know, advocating for some action to be undertaken by the company, like, you know, to conduct a strategic review with the idea of ultimately, perhaps selling the company or some other kind of financial engineering events.
Hmm. And so this seems like it would, going down that route decreases the likelihood of somebody or a company, you know, being, being caught off, caught off guard. Right? Like, that’s what it seems like, what comes to mind. Correct. It’s, it’s akin to corporate radar. Yeah. Oh, that’s a, that’s a great way of saying it.
So it’s corporate radar. Hmm. And so like what kind of companies would typically engage McKinsey partners for something like this? Like how would that, how does that work? Yeah, our clients range from micro caps to mega cap companies. We conduct, we conduct stop surveillance for, you know, we, we, as I say, we have a group, we have a team that is watching the stock on a daily basis.
We try to suss out trade settlement activity. And determine who’s entering the stock who’s left the stock, you know, so part of the reporting regime is that investors report on a quarterly basis. days after the end of the quarter. Positions and it’s not a catch all. So not everyone is required to report.
And right from the get go, that information is stale. Right? So we just got the last. Week or 2 received the 1231 numbers. So obviously that’s 45 days after the end of the quarter. So a lot of trading can occur. So it’s really our service is really that intra quarter. Activity that may occur, helping helping an issue or understand.
What the movements in the stock are, particularly days where there’s a high volume kind of anomalies and price movement that might indicate that something is going on. And we can also, gotten pretty good at looking at derivative activity. So, if someone is using derivatives to, to build a position, we’ve gotten pretty good at, at, at being able to call that out.
And it’s, and it’s, it’s a service that a lot of, a lot of our clients find very useful and it’s kind of the, the, the gateway service to our more robust advisory consulting practice. and you did mention that that’s just depending on what stage the company’s at, right? What are, what are some of the other things, ways they may engage?
Correct so the, the other part of what we do is advisory and consulting around activism, defense response and preparedness. So we’ll. As part of generally part of a broader deal team, the whole project team, if you will, so there’ll be outside lawyers, there’ll be a PR team. There’ll be a banker perhaps.
And then a proxy solicitor, which is broadly what McKenzie is defined and we bring just kind of our, our experience collectively. There’s probably in house over and some of my colleagues may regret that. I say this, but there’s probably like, 2 centuries worth of cumulative experience in house that we bring to bear.
And, you know, it helps having seen
Marker
know, if it’s a particular activist, having seen them before, having been opposite them before, knowing how they, how they act, what they do, what their typical playbook, if you will, is but also just understanding nuances of the market, the nuances of, of the, of the law, in particular, how it affects proxy solicitation campaigns And we weigh in on all these things, strategy, evaluating board, new board candidates, how the market may look at our candidates.
These would be the activists who might propose a board Folks board candidates who might be in opposition to 1 or more of an issue or companies currently seated directors. So there’s a host of advisory and consulting services that we perform and that is kind of the, you know, the, for my me personally, that’s kind of the mainstay of what I do.
Is that kind of service, you know, more of the high level advisory and consulting one. Well, Bob, I just have to say it’s been great catching up with you on the show and having you on and looking forward to your work at the Activist Investor Conference 2024. That being said, if somebody is listening to this or watching this and they want to follow up and continue to follow your journey or learn more about McKenzie Partners, how do they do that?
Sure. So they can, they can find me on LinkedIn. It’s Bob Mai, M-A-R-E-S-E, and I’m with Mackenzie Partners. And of course you can always find [email protected]. M-A-C-K-E-N-Z-I-E partners.com. And all our contact information is there. If someone wants to reach out, we’d love to hear from anybody who has questions.
I’m, I’m, I’m always happy to give free advice. And, you know, I never, as you probably picked up from this podcast, I’m, I’m never lacking in offering updated folks are always welcome to reach out to me. Fantastic. And speaking of the audience as always, hey, if this is your first time with Mission Matters or listening to an episode and you haven’t hit the subscribe button yet, now is your chance.
Hit that subscribe button because we have many more individuals coming up on the line and we don’t want you to miss any more of the, any of the programming coming up. And if you’re a long term listener and you haven’t left a review yet, man, you better leave that review. We, definitely appreciate it and that’s what helps the show grow.
So. Thank you for that review in advance, Bob. Thanks so much for your time. And thanks again for coming on. Thank you, Adam. It’s been a pleasure.