(Corrected to remove statement that Qatalyst cannot underwrite initial public offerings. It can do so.)
Silicon Valley's go-to banker is back. Frank Quattrone, who became a star during the 1990s' dot-com boom by bringing public more than 175 companies, including Amazon.com (AMZN) and Cisco Systems (CSCO), is grabbing market share from big Wall Street banks less than three years after starting his own firm.
Qatalyst Partners, founded in March 2008, catapulted to 10th place among financial advisers for technology mergers and acquisitions last year, ahead of Citigroup (C) and rival boutiques Greenhill (GHL) and Evercore Partners (EVR), data compiled by Bloomberg show. The San Francisco firm, which didn't appear in the 2009 M&A ranking, has already scored its first deal of 2011, advising home-networking chipmaker Atheros Communications (ATHR) in its $3.2 billion sale to fellow chip manufacturer Qualcomm (QCOM) on Jan. 5. "Qatalyst is filling the void created by the volatility of the technology sector and the entire generation of bankers who left the industry during the financial crisis," says Chris Varelas, a partner at Menlo Park (Calif.) private equity firm Riverwood Capital, who was Citigroup's head of telecom, media, and technology investment banking until 2008.
Quattrone, 55, started Qatalyst six months before the bankruptcy of Lehman Brothers in September 2008. Before that he spent five years on the sidelines in legal battles with securities regulators. He was exonerated on appeal, and the matter doesn't appear to have made a dent in his relationships with the top players in tech. "Frank has one of the best networks and expertise in the technology industry," says Larry Sonsini, chairman and co-founder of Wilson, Sonsini, Goodrich & Rosati, a Silicon Valley law firm that worked on $17 billion in technology deals last year, according to Bloomberg data.
Sonsini and Quattrone collaborated in August when they helped sell 3Par to Hewlett-Packard (HPQ) for $2.35 billion—a deal value that skyrocketed after an 18-day bidding war with Dell (DELL) more than tripled the purchase price. They teamed up again in November when they, along with Morgan Stanley (MS), advised video-storage provider Isilon Systems in its $2.25 billion sale to EMC (EMC).
The deals have placed Quattrone back at the center of the industry he dominated as a banker for Credit Suisse Group (CS). He left Credit Suisse in 2003 to fight allegations that he hindered an investigation into charges that the bank demanded kickbacks from hedge funds that profited from IPOs. Three years later the government agreed to drop all charges after he won an appeal of his conviction for obstruction of justice. "His success proves that there are plenty of third acts on Wall Street," says William D. Cohan, a Bloomberg Television contributor and former investment banker. "I'm not in the least bit surprised of his comeback in this environment where the tech machine hype is building again."
Qatalyst Group isn't a one-man show. Last April, Quattrone brought in George Boutros, his former deputy from Credit Suisse, as senior partner. At the same time he recruited Jason DiLullo, another managing director from Credit Suisse. Quattrone declined to be interviewed for this story. Appearing at the Web 2.0 Summit in San Francisco in November, he said that for company founders looking to cash out, mergers can be more lucrative than initial public offerings.
The bottom line: His legal troubles behind him, Quattrone is reestablishing himself as a leading Silicon Valley dealmaker.