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The Scotsman Who Can’t Stop Making Deals

“That’s where I sat. That’s where it all began.” Martin Gilbert is pointing to the spot where his desk was when, in 1982, he joined the old-line law firm of Brander & Cruickshank in Aberdeen, a granite-gray Scottish city facing the North Sea. The space he worked in doubled as a boardroom, so Gilbert would regularly have to step outside when his superiors gathered for their monthly meetings. “That’s where I sat. That’s where it all began.” Martin Gilbert is pointing to the spot where his desk was when, in 1982, he joined the old-line law firm of Brander & Cruickshank in Aberdeen, a granite-gray Scottish city facing the North Sea. The space he worked in doubled as a boardroom, so Gilbert would regularly have to step outside when his superiors gathered for their monthly meetings.
That didn’t last long. Reported on bloomberg

Gilbert | The story appears in the October / November issue of Bloomberg Markets. Photographer: Felicity McCabe for Bloomberg MarketsIn less than a year, Gilbert and two colleagues mounted a contentious buyout of the law firm’s investment trust unit. The deal would prove to be only the first of more than 40 that Gilbert, now 62, would undertake during his career in finance. At the end of four quarters, Aberdeen Fund Managers Ltd. boasted eight employees and a gross profit of $112. The little Scottish startup would eventually become Aberdeen Asset Management Plc, one of the U.K.’s largest money managers, its headquarters in London but its roots in Aberdeen.
It all went swimmingly—until it didn’t. Gilbert has navigated at least 16 market downturns, but nothing hammered his reputation as much as a 2002 parliamentary investigation into so-called split capital trusts, with one legislator accusing Gilbert of selling snake oil. Gilbert survived to steer Aberdeen through the financial crisis, and in 2012, with about £174 billion ($234 billion) under management, the company made it onto the FTSE 100 Index, affirming his ambitions.
That same year, however, Gilbert sensed danger. “I knew everything was going too well,” he recalls. “Emerging markets were flying high, and money was flooding in. I just kept telling the board to prepare for something, that it’s all going to change.” He was right. Bond purchases had been fanning a bull market in emerging economies where Aberdeen had bet two-thirds of its assets. When it became evident the U.S. Federal Reserve was going to enact policies that would curb the bond spree, markets lurched.
Investors began yanking billions of dollars from Aberdeen. By mid-2013 the firm had lost more than $5 billion, then an additional $7.2 billion by January, and a further $6.8 billion by the following June. And that was just the start. All the while, passive funds were siphoning investors from active ones such as Aberdeen. Clients would continue to pull money for, as Gilbert puts it, “four desperate years,” during which he would scramble to manage costs and diversify the business. It would be his last crisis as chief executive officer of Aberdeen Asset Management.

By January of this year, Gilbert had come up with a plan. He and Keith Skeoch, the CEO of Standard Life Plc in Edinburgh, agreed to do a deal. Skeoch, a fishing buddy and friend of 30 years, had also experienced massive withdrawals from his flagship funds. In March the two men announced an all-share transaction that would give Standard Life a 66.7 percent stake in the new, combined company, Standard Life Aberdeen Plc. The rationale for the Aberdeen-Standard Life union—strength in numbers, economies of scale—was pretty straightforward.
What’s much less straightforward is its management structure: The fishing buddies will be co-CEOs. This decision was something of a wet blanket in financial circles. “I would have thought that having one CEO would be better,” says Mark Dampier, research director at Hargreaves Lansdown Plc, a financial-services company, who knows both men. “But it depends.” Although two executives successfully ran Dampier’s company for years, he says he’s always found it “a bit strange” to have two heads of business. Gilbert and Skeoch being so different, however, could be a winning combination. “Martin comes more from the business side,” he says. “Keith is an investment man—which is why it might just work.”
To address concerns, Gilbert and Skeoch have sought to clearly delineate their roles at the new company. Skeoch will manage day-to-day business operations, according to a company announcement specifically addressing the qualms; Gilbert will be responsible for “external matters” such as client engagement, marketing, and business development. “Those that know us know we’re very different,” Skeoch has said. “And do you know what? That’s why we get on. … We’re complementary.”
In July, Gilbert has just returned from Dundonald Links on Scotland’s southwest coast, where Aberdeen Asset Management, by then in its final days, sponsored the Scottish Open. He’s upbeat about the co-CEO arrangement with Skeoch and pokes fun at himself. “He’s much more thoughtful than I am on things like pension reform or MiFID II,” Gilbert says, dressed casually in chinos and a white shirt with a sweater sitting askew on his shoulders. “That is where his strengths are, whereas I can just bullshit better than he can.”

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