Alumni Success StoriesLarry Tashjian, MBA '76
Provident Investment Counsel
What kind of business did the entrepreneur start?
Larry Tashjian, CFA, CIC, is an Executive Managing Director at Provident Investment Counsel (PIC), the third largest institutional money management firm in Los Angeles. Tashjian joined PIC in 1981 at which time it was a $115 million firm with ten employees, including the two founders who owned ninety-five percent of the Company.
In an impressive display of his entrepreneurial spirit, Tashjian along with three other junior partners managed a successful leveraged buy-out of PIC in mid-1989. They were able to put this together in one weekend and successfully quashed a yearlong acquisition attempt by United Asset Management. At that point, PIC had grown in assets to about $4 billion. Six years later, when UAM finally did acquire PIC, it had expanded its value over seven times and its assets had expanded to $15 billion while under the leadership of Tashjian and four other senior partners.
Historically, PIC has been an institutional money management firm; however, it is in the process of transitioning to have a more retail bias. It does traditional money management for large institutional pension plans and the transition over the last two to three years has been into retail mutual funds, or wrap-portfolios. PIC currently has offices in 7 different states throughout the United States.
What is the background of the entrepreneur?
The son of a pharmacist and on-the-side stock market junky, Tashjian grew up in a middle class community in Fresno, California. With his father, he studied the stock market as a hobby, while also working a paper route to make payments on his debt to brokerage houses for the stocks he bought on margin.
Tashjian received a Bachelor of Science degree in Finance as well as an MBA from USC. He completed his studies at USC in 1976 and subsequently earned the Chartered Financial Analyst and Chartered Investment Counselor designations.
In addition to being on the board of United Assets Management, Tashjian serves on the Board of Governors of Children’s Hospital of Los Angeles, and the Board of Directors for the USC Associates. He is also a member of the Advisory Council of the Entrepreneur Program at USC.
In 1981 Tashjian married and now has three children. Like his father before him, Tashjian too is teaching his children about investing.
How did the entrepreneur get the idea for starting this business?
Tashjian knew when he left USC in 1976 that he wanted to get involved in the stock market. He had been actively investing in equities since he placed his first buy (on margin) in the mid-1960’s while in junior high school. However, Tashjian’s timing for such a career was less than perfect. The 1973 and 1974 period was a Bear Market with slight movement away from that market in 1975. Thus, there was not a lot of hiring occurring in the equities industry in 1976. Many of Tashjian’s MBA counterparts were entering the more lucrative real estate business, but real estate did not interest Tashjian, the stock market did.
Tashjian had worked for Bank of America while in school and was a Bank of America student of the year for a couple of years. He was a teller for a while and also completed management training programs. Tashjian formulated a strategy for his long-term career objectives and decided to pursue an entry opportunity with B of A, figuring it was a great place to train. A debt financier, i.e., a banker, has some relation to the stock market when considering debt versus equity financing.
During his second of two years with B of A after college, Tashjian was its youngest branch manager in California. He also headed an office in Gardena and Watts, for about a year. At that point, a part-time professor of Tashjian’s from USC, Harold Davidson, introduced Tashjian to his father, the founder of Automated Retailers of America (ARA) Services. ARA is a multi-billion-dollar company out of Philadelphia with a large part of its business in nursing homes, uniform rentals and vending machines.
In 1977, Larry entered his desired business by joining Harold Davidson & Associates, a firm that primarily dealt in high net worth money. He made a fairly lateral move, economically, from being a branch manager at Bank of America into an entry position in the money management business. He did everything there, from washing cups and ordering supplies to SEC compliance, analysis, and marketing. He did it all, just so he could be in the business. Tashjian was with Harold Davidson & Associates from 1977 to 1981 at which time he joined PIC.
What did the entrepreneur do to start this business?
When UAM first tried to acquire PIC, Larry Tashjian was about 35 years of age. Had he allowed that acquisition to transpire, he would have had cashed out of the deal with a little bit of money; however, he did not want to go to work for somebody else at that point in time. Thus, despite bankers, accountants and lawyers working on this deal for almost a year he called three of his junior partners and drafted an LBO over one weekend. They called a private meeting with the 2 remaining partners and literally, in a period of about 5 minutes, ironed out the necessary terms. They called all of the UAM players to inform them that the deal was off. That occurred in 1989 when they were managing about $4 billion.
Tashjian and his partners doubled PIC, and continued to grow it until 1995 when the remaining original founder of PIC wanted to reduce his holding in the Company. PIC’s board was unable to, through proper estate planning, accommodate his desire. Therefore, it seemed an opportune time to affiliate with United Asset Management (UAM). The acquisition of PIC by UAM was, at that time, one of the largest transactions in the money management business. At the time of the deal, PIC’s assets under management were about $15 billion and it has since grown to about $20 billion in assets.
Tashjian is still an equity holder in PIC and over the last seven months has taken on the Co-CEO role along with George E. Handtmann III, another USC alumnus. Together they have plans to once again double the value of the firm over the next five years. Despite being owned by UAM, fifty percent of PIC’s earnings get reinvested back into the company directly. Tashjian remains a leader in management and an active member of the Board.
What major problems did the entrepreneur encounter during the startup of this business?
Management of the people. Tashjian knows from experience that the old cliché still holds: "You’re only as good as your people." In hiring top management for PIC, Tashjian and his colleagues are faced with a difficult strategy choice that they have historically vacillated on: (1) Hire young MBA’s right out of school and grow them in PIC’s specific money management strategy; or (2) Find people who have been in the business for five to ten years on the outside, and bring them in.
Additionally, PIC is faced with the issue of rewarding people fairly and according to their added value to the firm. It is a challenge to create new career paths for young entrepreneurial people who want to stay but do not see the home run: liquidation. These are very important issues to resolve if a company is committed to the development and advancement of its human resources.
How were these problems solved?
Creating the proper incentives for their people is an ongoing process for Tashjian and his counterparts. They have been working on accountability, incentive, and other types of compensation programs so that people at PIC have somewhat similar opportunities to what Tashjian himself had 15 years ago. Tashjian’s view is that they really did not sell their business, rather, they re- capitalized it, as if doing another LBO. He believes that if they can double the business again, all of the owners of this new business will do very well for themselves because the pool of assets will continue to grow, but only "if we run it right." That is what Tashjian sees as the upside, the opportunity for success.
Who did the entrepreneur use for help and guidance during the startup of this business?
As a member of Young Presidents Organization (YPO), one of the resources that Tashjian is exposed to is Management Action Plans (MAP). PIC brought MAP into the organization in the middle of last year to address a number of different issues in the business. Originally, it was used to assist with senior level management disagreements. As most consulting projects do, it started to expand and take on a life of its own.
MAP interviewed the four members of senior management, then the seventeen junior members and tried to reconcile the concerns between the two groups. The outcome included new company-wide accountability/incentive programs and changes in management responsibility. A mentor program was also instituted about two to three months ago. Everyone has a mentor, preferably someone outside the business and a decade older than himself. With endearment, Tashjian describes his mentor, Jerry, as "a tough-old-SOB," acknowledging the fact that Jerry is "challenging the heck out of" Tashjian.
What advice would the entrepreneur give to someone thinking about starting a business?
Larry Tashjian’s parting message for budding entrepreneurs is best delivered in its original phrasing:
"I think the true entrepreneur doesn’t give up; I mean he just figures out a way to make it happen. And that’s easy to say and I don’t want to bore you with all of my frustrations, but there have been a lot of them over the years; there have been a lot of them here at this firm. I have a passion for where I want to be; I need to control that enthusiasm when dealing with others. I’ve had a lot of disappointments along the way; but I think the true entrepreneur handles adversity. There are days I come home and I am just so beat up and my wife says, ‘I don’t know how you get up in the morning and all of a sudden you’re enthusiastic again’, and I don’t know how that happens either. Historically around here a lot of us have athletic backgrounds. When you do that I think it gives you a desire to just want to win, to win at all costs. I don’t want to be a jerk about this, but I want to win; I want to beat everybody in the world, and I want to be #1."
Why was this entrepreneur successful at getting into business?
Although Tashjian attributes a great deal of his success to luck, it is clear that he has been training for his role as managing director of a major money management company since childhood. Spurred by his father’s belief in the growth of corporate profitability and enthusiasm for learning about, and investing in the market, as well as his own confidence in being able to beat the market over time, Tashjian began his stock market career in the sixth or seventh grade. Since that time he has remained true to his conviction that the stock market is a place where one can excel in the long run and risk is merely part of the process. His level of commitment to, and faith in what he does is apparent in the realization that he is a man who has lost client money to the tune of a billion dollars in a day, once or twice in his life.
What became eminently clear during his tenure at B of A was that he did not want to work with: "The frustrations of a bureaucracy." As an entrepreneur, Tashjian wants to "address an issue, talk about it, make a decision, and go on." That is what he does consistently. Tashjian made a series of career choices that allowed him the opportunity to acquire his own firm. Even the move to relinquish a percentage of his equity in PIC was part of his strategy, i.e., promoting growth of the company towards eventual re-accumulation of individual holdings. He knew at a young age that he did not want to work for someone else. This was his goal and he would not accept anything less.
Family and community must be mentioned when describing Larry Tashjian. His passion for giving back is as powerful as his passion for winning. About seven or eight years ago he and his partners funded a quarter of a million dollar program at both USC and UCLA. This led to the formation of the advanced portfolio management classes, giving students in the MBA programs real live portfolios to manage. Tashjian started the same program at the high school level in his home town. Through his enthusiasm and the stories he tells, it is clear that Tashjian is involved at the personal level as well as on a financial basis with these programs.
Tashjian has been married for seventeen years and is very active with his wife and children; he makes games out of teaching them the stock market, which is quite consistent with the close relationship he described between himself and his father while growing up. His father’s influence has led Tashjian to be the man he is today. In business and in entrepreneurship, Tashjian’s accomplishments are quantifiably remarkable. As a father, husband, son, and community leader, Larry D. Tashjian epitomizes success.
- Sabrina Cohen