Mark Beresford, a director located in the London office, recently spoke with one of the longest-serving CEOs of Edgar, Dunn & Company, David Poe.
David, also known as Dave, served as the Chief Executive Officer and Managing Director of Edgar, Dunn & Company from 1999 to 2009 and also served as its Director of the San Francisco office until April 2014. He joined the firm in 1980 where he was involved in providing strategic business services to the financial services industry, with a particular focus on payment products. He has been the non-executive Chairman of the Board of ACI Worldwide, Inc. since May 2016. He serves as Chairman Emeritus and Member of the Advisory Board for the Bank of San Francisco and also serves on the board of directors of several non-profit organizations. Dave also has some non-executive duties and serves as Chairman of the Board of Directors of a UK-based company that provides services to the geothermal energy industry. He is a frequent author and speaker for various financial services industry magazines and forums. He has a Leadership in Professional Services Firms certificate from Harvard University's Graduate School of Business. Mr. Poe holds a Bachelor of Science degree from the University of Idaho and an MBA in Finance and Marketing from Northwestern University's Kellogg Graduate School of Management.
Dave wanted to draw upon his learnings from two acquisitions of Edgar, Dunn & Company; one during the period when he was Chief Executive Officer and Managing Director from 1999 to 2009. Both acquisitions were from two very different companies and both were subsequently reversed, which has meant that Edgar, Dunn & Company remains independent and privately owned, even to this day.
Dave was enthusiastic to share the learnings and how these acquisitions had helped shape the firm and make Edgar, Dunn & Company one of the few remaining strategic payments consulting firms which retains its independence and has a global presence. This was an intriguing history of Edgar, Dunn & Company because both acquisitions were before I joined the firm in 2003.
The first of the two acquisitions that Dave spoke about was with ICF International, Inc. a technology services company. The ICF acquisition was made in 1989 and only two years later we bought ourselves back. There were positive and negative aspects of this acquisition. Dave described how disruptive it was to be part of a much larger organization whose culture was completely different to ours. Internal processes and policies were different and it seemed that even conducting simple initiatives took longer than expected and required more collaboration from a wider set of stakeholders. This obviously was not helpful for decision making which was much quicker in a smaller firm. On the positive side, this acquisition had given the founding partners, Jim Edgar, Peter Dunn and Todd Conover, some liquidity and the ability to recapitalize the firm with broader ownership.
The history of the second and last acquisition needs a little historic context. Roughly from 1997 to 2001 the dot-com bubble and the information technology bubble was a historic economic bubble and period of excessive speculation. It was a period of extreme growth in the usage and adaptation of the Internet by businesses and consumers. During this period, many Internet-based companies, commonly referred to as dot-coms, were founded, many of which failed. As the world approached the year 2000, there were also concerns over how our computers and computer software would react to the date change from 31 December 1999 to 1 January 2000. This was also the time of the second acquisition which was like a double whammy, involving AppNet Consulting, who was then immediately acquired by CommerceOne, a B2B marketplace platform in 2000.
This acquisition same during Dave’s tenure as Managing Director. He said that it was like a repeat of the ICF acquisition, where he found himself and our strategic consulting firm inside a technology-focused organisation. At its peak, during the dot-com bubble, the company had 4,000 employees and a market capitalization of $21.5 billion. CommerceOne had a completely different culture than ours.
Dave tried to explain why we did it in the first place and at the time, it made good business sense. There was a consolidation trend in the consulting industry to broaden expertise. The CommerceOne acquisition had potentially provided capital for growth of the business consulting practice. It also potentially provided synergies by imbedding consulting services into the CommerceOne client base. CommerceOne had its initial public offering in 1999, and the company's stock price rose significantly, which led to a number of acquisitions. Edgar, Dunn & Company, was one of them. However, the technology bubble burst in March of 2000, and CommerceOne went out of business less than two years later. This was the time when we bought ourselves back.
In the early 2000’s Edgar, Dunn & Company, independent again, embarked on a strategy of being a global specialist in payments and financial services. With offices in London and Sydney, our international capabilities were growing, Dave explained. It was the right time to shed ourselves of ancillary consulting practices that did not fit into the core offering. These included a practice for rate-regulated utility companies and a branding strategy practice. The firm added a capability to the already established US and European capabilities by building a practice from our office in Sydney into the wider, emerging markets in the Asia Pacific region. Dave spoke about how local talent had to be hired and how existing staff were able to support the growth of these relatively new offices.
As more and more people began doing business online, the need for secure communication and transactions became apparent. In the early 2000’s, the Payment Card Industry Security Standards Council (PCI) was formed to ensure businesses were meeting compliance with various security requirements, and Edgar, Dunn & Company began developing an expertise in secure payments. Dave described how payments and payments players were moving to be more global which meant that Edgar, Dunn & Company also had to become global to tackle the needs of our clients.
Technology companies were becoming significant stakeholders in the payments industry and the internet was the foundation for doing business online and companies such as PayPal, that formed in 1998, were great examples. The technology companies that survived the dot-com bubble were maturing and were able to leverage our expertise to support their growth internationally. At one point, all our US and international offices had a PayPal related project. Clients were looking for specialist services, local expertise and knowledge. Clients did not want generalist management consulting services. Dave interpreted the 2000’s as a time when the payments industry was increasingly acting on a global basis and our client engagements meant that the Edgar, Dunn & Company brand became recognised and synonymous with strategic payments consulting.
Dave reflected on the fact that when you are relatively small, a strategy consultancy needs to be a niche player so that your brand becomes known for your specialist services. By following the needs of clients, Dave said, meant that Edgar, Dunn & Company was able to go where the opportunities existed. New forms of payment and payment-related services are being launched by both the conventional financial services companies and the newer technology companies that were established in the internet, digital age. Dave believes that Edgar, Dunn & Company has to be able to stay up to date and build upon its knowledge and expertise. There are many disruptive forces driven by a technological transformation and how people and businesses conduct digital commerce means that Edgar, Dunn & Company is able to provide objective advice.
Dave concluded that it was vital that the firm maintains a strong single organizational culture to allow people to work across markets in a seamless and cooperative fashion. Even to this day, we still operate a single P&L for the firm and the majority of our client engagements will involve our permanent staff from more than one office location and a network of dedicated associates located all around the world.