Five questions with EMG President Nestor Benavides

Saturday, 10 June 2017, 09:01:05 PM. The president of Hunt Valley-based EMG, which provides property due diligence, project management and capital planning services, chats with The Baltimore Sun about the firm's evolution.

Hunt Valley-based EMG forged its identity amid the late-1980s real estate frenzy that ended in the savings and loan crisis, providing consulting services for investors buying and selling office buildings and other properties.

The company made it through that bust and continued assessing buildings for buyers until the credit crunch hit in 2007. Two of its three biggest clients in 2007 — Bear Stearns and Lehman Brothers — collapsed. Sales nosedived from $47 million in 2007 to $14 million in 2009.

EMG survived by tightening its budget, including shrinking its staff, said company President Nestor Benavides, who was hired by new owners in 2006. Since then, the firm has benefited from the upswing in real estate deals, while also moving to make its business less exposed to real estate cycles.

In 2013, the company acquired a smaller Virginia firm and in September it merged with Arizona-based QPM, adding project management to its services, extending its reach beyond transactional assessments and planning for capital improvements.

The firm now has headquarters in Maryland and Arizona, with smaller offices in California and Florida. Full-time staff has grown to 370, while the number of part-time employees has jumped to 220. The company expects to reach $63 million in sales this year.

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Benavides, an engineer who did stints at Procter & Gamble and startups that included Baltimore-based ear-warmer maker 180s, said he wants sales to reach $100 million in the next three years. A native of Peru, Benavides moved to the U.S. at age 8, when his family came in search of better medical care.

"At EMG, we're taking a 30-year-old company that has a tremendous foundation and trying to create a very exciting story. I don't know how it's going to end," he said.

How did you accomplish the turnaround?

In 2006, the real estate market was booming but the company wasn't designed to make money. It was designed to churn a lot of work through. … We changed the model so that we could produce a lot of work and be profitable. We used to manage the company to a single budget, so we were making an educated guess of what the budget would be. We introduced a variable-cost model. Because of the nature of the business, we don't know exactly what the sales are going to be, but we know with great certainty what the range of sales is going to be. We had to change a lot of contractual relationships and change the design of how we bring in resources. ... That way our objective was to make money every month.

A lot of our competition has multiple offices, but the model is to execute nationally but to centralize the infrastructure so that all reports come in for a very tight technical review. … Our work happens on people's properties. We don't need to have a lot of brick and mortar.

How did you find QPM?

We bid a project in March 2011 to a large nationwide client … and we lost after a lot of effort. And we lost to this little company called QPM that we had never heard of. … They weren't ready to do anything so we just kept in touch. I think what changed is they realized the potential to grow was so much more exciting if we could bring the two companies together.

We have 3,000 active clients with five core services. They have 200 active clients with limitless services. … The opportunity is to bring their services to our clients.

Ultimately, the nugget of EMG was this ability to execute technical assessments and project management on buildings. The company had been founded in this transactional space and the transactional space had a lot of seasonality and cyclicality so strategically our single biggest objective was to strengthen our ability to do all assessments, by diversifying into other relevant and value-added services …. Now we're saying: If you have buildings around the country, we can help. … We'd like to be the trusted partner.

Most people do what we do because they're trying to do something else. That makes the intelligence and the product they deliver in this important assessment biased.

You've had a couple mergers. Are we going to see more?

I believe all companies are either in a state of growth or a state of decay and you have to be careful not to grow too quickly. Right now we are executing on the strategy, digesting the strategy that we've kind of consumed over the last year. We believe we can get to $100 million without any additional mergers or acquisitions but … we're trying to look three to five years out, and so we're trying to look at what would be the types of markets and services that would make sense to add on from there. So we absolutely expect to do more mergers and acquisitions going forward.

How did you get into engineering and come to EMG?

I became an engineer because all of my uncles seemed to be engineers, but they had all become businessmen.

When I was looking to buy a company, one of the companies I looked at was a remediation company. I connected to [EMG CEO Claude Limoges] because he was connected to that industry. He called and said, 'Why don't you stop this buying company nonsense and come work with us in operations?"

My background's been a jack-of-all trades with a lot of time in consumer products, but most often in engineering and operations, and EMG ultimately is a blend of those two things.

I wanted to run a company. … I knew that from the get-go. Because I think, ultimately, I love the engineering of business. I love trying to optimize the engine that is clients and employees and services or products and how all those three things need to be optimally balanced. I'm insatiably curious and I love to play with all the levers.

A big part of my motivation is I want to help create a company that is here and healthy 100 years from now.

Are there any things your employees would be surprised to know about you?

I don't think they'd be surprised by much. Above all else my hobbies are being active and just enjoying the gift of being able to walk and run and jump. I love being outdoors and I love feeling strong. It makes everything else more enjoyable and make more sense.

nsherman@baltsun.com

Nestor Benavides

Title: President, EMG

Age: 47

Hometown: Lima, Peru

Residence: Ellicott City

Education: Bachelor's degree in mechanical engineering, University of Maryland, 1990

Family: Married, with three sons, ages 11, 15 and 17

Interests: Philosophy, being active; competed in the Columbia Triathalon for 10 years and just completed a second Tough Mudder with a "group of dads," with plans for a third

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