Q. Can you explain exactly what your company does and what problem it solves?
We help global financial institutions, multinational corporations and governmental agencies address their most pressing financial crime compliance and risk management issues including money laundering, sanctions violations, bribery and corruption, fraud and terrorism financing activity.
We get involved in many ways. These issues aren’t typically addressed proactively, so we are often contacted when an organization needs help. Usually it is in response to a third party regulator, an internal audit, or when they see a competitor go through a problem they want to avoid. We help our clients to effectively manage their challenges while developing and implementing the policies, procedures and programs needed to create a sustainable compliance environment and address the constantly changing issues and laws governing this space.
Although compliance is a cost, if it’s done well it can become a competitive advantage. Companies have to be in compliance. They want to acquire services and solutions that allow them to do it as fast, efficiently, and affordably as possible. Our focus is to bring tech-enabled, sustainable compliance solutions to our clients.
Q. How did Exiger get started?
I first started working with my co-founder Mike Cherkasky in 1998 when Kroll acquired Lindquist Avey, a forensic and investigative accounting firm I co-founded in 1991. I became the head of strategy and M&A at Kroll and together we grew Kroll from $50M to $700M before Kroll was sold to Marsh & McLennan in 2004. After that experience, we worked together at Altegrity, but we knew we wanted to build another company together and began looking for potential platform acquisitions. When HSBC, under the direction of the Department of Justice, appointed Mike Cherkasky to be their monitor and oversee one of the world’s most comprehensive compliance reviews ever executed, we debated solely running the monitorship or building a business with the monitorship as the first assignment. We decided to build a business in GRC (governance, risk and compliance) with a focus on financial crime compliance.
Q. What are some of the specific challenges you’ve faced as the company has grown and how have you successfully addressed them?
On day-one we started the business with a very large contract that would have typically gone to a big four accounting firm. We were in this position because of our experience, reputation and independence, but the fact remained we were still only two people. We immediately had to build out our business. We needed technology, staff, offices, benefits, payroll, everything. Thankfully we were able to conquer most of these challenges by partnering with industry vendors and leveraging online tools. Once we had built the core of the business, brand and technology, the next big challenge was getting it to scale to meet the demands of the global financial marketplace. This meant being able to serve a global FI in all of its markets. That’s a big demand, which involves getting the technology to do volumes while meeting the time frame and language requirements of all of our clients. A big part of the solution was hiring a highly capable COO –introduced to us through Carrick’s network -- who could help us address all these issues and scale faster.
Q. Tell us about your decision to bring in an equity partner?
When we started Exiger, we made the decision that we wanted all of the initial employees to be founding shareholders of the company. We knew that after five years, we wanted to monetize share value to reward the initial employees for their commitment to joining us when we were a start-up. So in addition to the typical reasons companies seek private equity – growth capital and business guidance – we also had the additional motive of wanting to apply some of the capital toward rewarding our hard working team for their loyalty and a job well done.
Q. What are the benefits of working with a group like Carrick Capital Partners?
We were first introduced to Carrick by a mutual friend. More than three years before we started looking for private equity, the founders of Carrick took an interest in our business and made time to talk regularly about our progress. Over those years we met for coffee numerous times to talk about the business. We were much smaller then, but they saw our potential and spent time hearing about our successes, challenges and building trust. When the time for PE came, we looked at 40 firms and narrowed them down to 13 to participate in our process. The day the process began, we made it clear to Carrick that this was theirs to lose because we already knew them, trusted them and valued their ideas.
Carrick wasn’t the largest bid, but we knew from the years of getting to know them that they were a solid fit. We could have pushed for a bigger valuation but what was more important to our growth trajectory was having the right partner to help us successfully grow our business. Although we announced our deal in July of 2018, for more than three years, Carrick has felt like an emerging partner. In fact, we are launching our 5th business unit in Spring 2019, based on one of their ideas. We expect it to be one of our greatest growth initiatives to date.
Q. What’s your advice for other businesses considering private equity?
I’ve worked with PE and I’ve been backed by PE, and based on those experiences I believe the two most important considerations are:
1) Make sure you know the people who will be your partners. Are they high integrity, quality people, interested in your business challenges and eager to share their ideas and experience in a positive way? Can you see yourself working with them in good times and bad? What is their track record with other companies that have similar needs to yours? Remember, you are going to go through highs and lows with these people, and if you don’t get along with them now, there will certainly be a problem later.
2) The second consideration relates to their professional experience and where they came from. One of the characteristics that sets Carrick apart is their operational expertise. I’ve worked with PE firms that are staffed principally by investment bankers whose focus is on financial analysis and metrics. Former operators, on the other hand, can really participate in the operational discussion based on their own experience and provide useful advice. It is a much more valuable experience when you are able to have a conversation with someone who has actually done what you are doing.
Q. What are your goals for Exiger over the next five years in terms of growth; and what do you believe will be Exiger’s impact on how global financial institutions and corporations combat financial crime, risk and compliance challenges?
We plan to triple our size and share price over the next five years. Big picture, we want to help global financial institutions and corporations create a compliance environment they can sustain for the long term that empowers them to proactively address financial crime, risk and compliance challenges. To do this we need to continue developing technology solutions that reduce the total cost of compliance and change the behavior of otherwise risk adverse global institutions. Many organizations in this space try to solve problems with either technology built by technologists or strictly by deploying people. Our approach has been to attract leading technologists (formerly of Bing, Microsoft etc.) to develop our solutions under the direction of financial crime compliance experts from the industries we are serving. The outcome? The most effective, tech-enabled, sustainable risk and compliance solutions purpose built for the challenges our clients face.