Mesirow board asks Price to stay as CEO

Richard Price, chairman and CEO of Mesirow Financial Holdings Inc., didn't think he'd lead the company for more than a couple of years after his friend and Mesirow's longtime leader, Jim Tyree, died in March 2011.

Mr. Price, who had been president, was thrust into the CEO job and figured the Chicago-based company's board could pick someone to take over from him. After weighing that decision, the board in May zeroed in on a choice, asking Mr. Price, 66, to stay in the top post indefinitely. They want time to develop criteria for selecting the next CEO, and that's likely to take at least a year, Mr. Price said.

“They're in no rush, and I think that they're in no rush because they know that if they needed to act, they would act,” Mr. Price said. “I'm guessing the board has six or seven or eight people that they would think about putting in that role."

Privately held Mesirow, which has 1,200 employees, will almost certainly choose an insider, Mr. Price said. He would like the new leader to be appointed in a time frame that allows him to work with that person for several years before he steps back from steering the company, he said. His former role of president has remained unfilled.

Often, a company narrows a list of potential successors to about two or three, allowing them to compete before a decision is made, said David Stowell, a professor at Northwestern University's Kellogg School of Management.

Over the past two years, Mr. Price has pursued a strategic review of Mesirow's asset management, insurance, capital markets, investment banking and consulting businesses. After shedding a few businesses, including clearing services and international equity businesses, and restructuring others, such as the investment advisory division, the company is now mainly done with that process, Mr. Price said. Mesirow also recently sold its ownership stake in PrivateBancorp as the company refocused its capital interests on its own business.

The financial services industry has been cutting costs and headcount, especially at the big New York firms, as demand has declined in recent years, Mr. Stowell said.

Mesirow's annual revenue, estimated at $509 million for the year ended March 31, remained flat over the past two years. Mr. Price said its pretax and after-tax earnings have climbed to record highs in each of the past three years, although the company won't disclose those figures.

All that remains is completing a five-year plan, Mr. Price said. Despite shedding some businesses, the company is focused on using excess capital to expand, especially in its investment management area. Mesirow has $77 billion in assets under management, including 70% from international sources, up from about $54 billion two years ago.

Mesirow, which has $352 million in capital and no debt, examined about a dozen possible acquisitions over the past year but elected not to pursue them. It is reviewing another six now, Mr. Price said. While he declined to name the targets, he said they are in the investment management and insurance industries, with potential for expansion in the U.S. or abroad.

Specifically, the company could move deeper into Canada and Australia over the next couple of years and into Japan, South Korea or China over a longer horizon, he said.

The key to an acquisition will be finding a company that's not offering a distressed sale and is a good fit with the employee-owner culture at Mesirow, Mr. Price said.

“We're not into getting anything that's distressed,” Mr. Price said. “Especially in the investment management area, there are a lot of distressed assets out there today and that's not really what we want. We want something that would be additive to the business both from a people standpoint and a product standpoint, and hopefully a geographic expansion as well.”

As far as another company acquiring Mesirow, Mr. Price says those propositions have dropped off since spiking after Mr. Tyree's death, and he expects the company is unlikely to be sold or have an initial public offering.

“Going public will never happen, a sale will never happen because I think the way we've built the company and how we've attracted the great talent that we have is because of our culture and culture is driven by the fact that we're a private, employee-owned company,” Mr. Price said.

" Mesirow board asks Price to stay as CEO" originally appeared on Crain's Chicago Business' website, a sister publication of Pensions & Investments.