There will be no last-minute reconciliation between Pacific Corporate Group and the three managing directors who resigned last week over compensation concerns. The two sides spent much of the weekend in negotiations, but to no avail. I cant say whether the salary demands of Monte Brem, Tara Blackburn and Steve Moseley were appropriate or excessive. In the end from a client perspective — it doesnt really matter. Expect a formal statement from PCG sometime later today.
So what now for PCG and the departed?
The former is sweating, and it should be. Public pensions often get derided in this space as dumb money, but few of them are stupid (NYC being apossible exception). Managers at Oregon, CalPERS, Illinois Teachers and elsewhere must have noticed by now that the only consistency at PCG is its ability to drive away top talent. The most important part of an LP-Advisor relationship is the actual relationship between individuals, and that is simply something that PCG clients can no longer trust to be maintained.
PCG plans to engage an executive search firm to find a replacement for Steve Moseley (co-investments), while it has promoted Michelle Davidson to take on Tara Blackburns responsibilities. Monte Brem will not be replaced, with his duties being taken over by a newly-formed management committee that includes Chris Bower, Mark Oemcke, Tom Keck and David Scopelliti. No final decisions yet in regards to European managing director Michael Russell, who may be the next to leave.
Brem, Blackburn and Moseley each signed non-compete clauses with PCG, so will be unable to work until those are satisfied. Some older PCG non-competes lasted six months, but Im not sure if theyve been changed since then. One possibility, however, is that the trio could offer PCG a deal whereby they help retain certain clients in the short-term, and then are allowed to transition said clients to a new firm early next year (Brem, Blackburn & Moseley Advisors?). Just speculation, of course, but it seems like a logical move for all involved.