We should have put a tail on this guy a few weeks ago! :
Tech Banker Amasses Loyal Following
By Gregg Wirth
Staff Reporter
1/20/99 8:46 AM ET
Call Frank Quattrone the Secretariat of investment banking. Like the
legendary racehorse, Quattrone, the thoroughbred tech banker,
completed a Wall Street version of the Triple Crown last week.
Quattrone advised Ascend (ASND:Nasdaq) on its $18.5 billion
takeover by Lucent (LU:NYSE), marking the third time he has worked
with the networker on a major deal. He also took the company public in
1994 and then advised Ascend on a big acquisition three years later.
But what's most interesting is that he accomplished this feat at three
firms -- Morgan Stanley, Deutsche Bank and Credit Suisse First
Boston.
"I think about 99% of the clients we had at Deutsche and Morgan are
working with us now at Credit Suisse," says Quattrone. He adds that
Credit Suisse has been involved with tech-company transactions
valued at more than $50 billion since last summer, when he and his
group of about 80 joined the firm. Now, the group numbers about 160.
Q-Factor
Quattrone's big deals and where he was
Ascend's $18 billion
purchase by Lucent
January 1999
Credit Suisse First
Boston
Amazon.com IPO
May 1997
Deutsche Bank
Ascend's $3 billion
acquisition of Cascade
March 1997
Deutsche Bank
Netscape IPO
August 1995
Morgan Stanley
Ascend IPO
May 1994
Morgan Stanley
Quattrone's power also shows that it's possible for investment banks to
essentially buy business by luring top talent, a tactic that's perhaps
even more important for foreign investment banks like Deutsche and
Credit Suisse First Boston, which are trying to work their way into the
U.S. market. But foreign investment banks such as NatWest and
Barclays so far have largely flopped when they've tried to work their
way into Wall Street's top echelon.
Deutsche spent about $25 million to lure Quattrone and his group from
Morgan Stanley in 1996 and gave them a percentage of the business
they attracted. But the German parent lost patience with its overall U.S.
equity efforts and drastically restructured here last year, leading to
Quattrone's exit. Deutsche, meanwhile, is taking another shot with its
pending purchase of Bankers Trust (BT:NYSE).
But Credit Suisse First Boston has had more success, even before
Quattrone. It was ranked sixth last year in securities underwriting,
ahead of such household names as Bear Stearns (BSC:NYSE) and
Donaldson Lufkin & Jenrette (DLJ:NYSE). Quattrone's group is
adding to that.
Last Wednesday, the firm priced a $200 million secondary offering for
EarthLink (ELNK:Nasdaq), a highflying Internet company. Given the
average fee on a secondary, the deal could have garnered the firm
between $4 million and $5 million, one equity pro estimates.
Quattrone's group "is doing a great job," says Chuck Ward, Credit
Suisse First Boston's head of global corporate and investment
banking. "They're everything we thought they'd be."
Quattrone says he wants to build the tech group into a $200 million to
$300 million annual revenue stream for the firm, indicating that
projection is far above what his group generated at Deutsche. For last
year's first half, Credit Suisse First Boston reported $4.5 billion in
revenue.
Several other Wall Street equity and banking pros say the
phenomenon of carrying big-money clients to a new firm is a rarity,
holding true for only a handful of Wall Street rainmakers.
And Quattrone hasn't had unchecked success. Amazon.com
(AMZN:Nasdaq), which Quattrone took public in May 1997 while at
Deutsche, has returned one other time to the capital markets for a
junk-bond offering last year. It chose Morgan Stanley Dean Witter
(MWD:NYSE).
Yet that's uncommon for Quattrone. "Much as it would offend
investment bankers, their clients are not at portable as they think," says
one Wall Street research professional, requesting anonymity. "But in
the case of Frank, his clients are portable."
Scott Coburn, PaineWebber's co-head of equity capital markets,
agrees, saying it's always in question when a banker moves from one
firm to another whether clients will follow.
"If the bank he leaves has a franchise that the clients want to stick with,
the clients will stay" with the firm, Coburn explains. The fact that
Quattrone took a whole technology department, complete with bankers
and analysts, with him added to clients' desire to stay with the banker's
group, Coburn explains.
Ken Fehrnstrom, Ascend's vice president of business development,
says that's exactly why Ascend stuck with Quattrone. "Frank's team is
one with which we feel very comfortable," says Fehrnstrom, adding that
Ascend has worked mainly with two of Quattrone's team, bankers
George Boutros and David Britts. "They're the premier high-tech M&A
guys in the business."
Fehrnstrom says the company evaluates its banking relationships
continually and has gone with other banks in other situations. Still,
Ascend does find its way back to Quattrone's group for its biggest
deals. "We have a very high regard for them," Fehrnstrom says.
Ascend's not alone. EarthLink first filed to hold its secondary offering in
early June with Deutsche as its lead bank. The offering was delayed,
like many others, when the equity and new-issue market dried up in
summer. By the time EarthLink moved to put its offering back on the
table, Quattrone had moved.
Grayson Hoberg, EarthLink's CFO, says the company chose Credit
Suisse First Boston because of Quattrone's group. "They started the
road show and oversold the book," Hoberg says. "The level of service
was great."
Another tech company, Micromuse (MUSE:Nasdaq), turned to Credit
Suisse for its secondary last July, even though Deutsche Bank had
underwritten the company's IPO in February.
Mike Taylor, vice president of corporate finance, says the company
moved its business to Credit Suisse First Boston because the banker
working with it, Bill Brady, and the analyst covering it, Wendell Laidley,
both moved with Quattrone. The lure, Taylor says, was that Credit
Suisse First Boston has a superior sales staff, analyst coverage and
relationships with institutional buyers compared to Deutsche.
Says Taylor, "For us, it was like having the same brains in a better
body." |
