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On The Money
Nascent firm, Milestone, is successfully navigating a tricky financial landscape
JESS VARUGHESE SURE PICKED A TOUGH TIME LAUNCH
a firm focused on global financial markets industry.
But Varughese, managing partner of New York-based Milestone Advisory Services, doesn’t see it
that way. “There’s nothing like tough market conditions to validate whether or not you’re in the right
business, and whether that business has staying
power,” Varughese says.
“Actually, we feel pretty
good that our business
model has been validated.”
So far, Milestone has
been able to weather the
storm by sticking to its original target markets—the capital
market and investment banking space,
areas where Varughese has plenty of expertise from his days at KPMG, Navigant Consulting and BearingPoint.
Varughese and two other former
KPMG financial services veterans now
make up the leadership at Milestone.
Even with the recent downturn in
the economy, Varughese says Milestone has been
able to keep to its original business plan. “There’s
still a lot of consulting work to be done. The type
of work we’ll do will change. We’ll be more
focused on cost, cost efficiencies and cost take-out,”
he says. “We’ve always knew we wanted to be on
the mission critical side, but we have to be very
capable of turning on a dime if the markets don’t
respond. There’s nothing right now that gives me
any concern relative to the client base we have rel-
ative to the kind of clients we have and the projects
we’ve taken on.”
Varughese says Milestone’s clients have so far
been able to weather the storm and have been able
to come out of this looking relatively good. “We
haven’t been tied to the Countrywides of this world
or any of the other big names that have been
involved with these issues we’ve heard so much
about.” Varughese says the mortgage area right
now is “a restructuring and recovery effort” that
calls for skills that Milestone doesn’t necessarily
have. “There is no building or transformation work
going on in that space right now, and that’s really
where we excel.”
The other area that has stalled is the leverage
finance business, he says. “Banks are no longer
providing significant lending and leverage to private equity houses as they go and acquire companies,” Varughese says. “I think the pundits all agree
that’s an area where we’ll see a significant
retrenching and changing of the way deals get done
in that space. There’s a revenue stream that’s drying up for investment banks.”
But there are opportunities, he says. One of the
biggest ones may be the rise of sovereign funds
entering the U.S. “The last count I saw is $1.7 trillion—that’s staggering. That’s double the entire
holdings of every private equity firm in the world,”
Varughese says. “Suddenly, there are vast amounts
of money being put to work in the U.S. Once this
kind of external capital gets put to work, there’s a
lot of revenue-producing opportunities that go with
it—advisory fees, deal fees—that go with that market. That’s a very good thing.” —Joseph Kornik
Jess Varughese
Now watch Jess Varughese
discuss the financial markets and
Milestone Advisory Services on
Consulting magazine’s One-on-One
at www.consultingmag.com.
