Thomas Weisel Banks on His Reputation to Bring Deals to Stifel
Thomas Wiesel of Stifel Financial Corp.
Noah Berger/Bloomberg
Thomas Weisel, co-chairman of Stifel Financial Corp.
Thomas Weisel, co-chairman of Stifel Financial Corp. Photographer: Noah Berger/Bloomberg
Thomas Wiesel of Stifel Financial Corp.
Noah Berger/Bloomberg
Thomas Weisel, co-chairman of Stifel Financial Corp., sits for a photo in his firm's office in San Francisco, California.
Thomas Weisel, co-chairman of Stifel Financial Corp., sits for a photo in his firm's office in San Francisco, California. Photographer: Noah Berger/Bloomberg
Thomas Weisel is betting that his four decades as a Silicon Valley dealmaker can help him build the Midwestern investment bank Stifel Financial Corp. into a bigger force in acquisitions and initial public offerings.
Weisel, 69, took the role of Stifel’s co-chairman last month after the company bought his old firm, Thomas Weisel Partners Group Inc., for almost $200 million. His new job: parlaying his connections into more underwriting and advisory deals for his employer. Stifel makes much of its money helping customers issue stock, raise debt, and buy and sell companies.
His challenge is building Stifel’s recognition among Bay Area venture capitalists, private-equity managers and executives, many of whom haven’t worked with the St. Louis-based bank. He also faces a drought of IPOs. While mergers have picked up, many companies prefer to use the biggest investment banks, such as Goldman Sachs Group Inc. and Morgan Stanley.
“I’ve been doing this for 40 years,” Weisel said in an interview at his 37th-floor office in San Francisco. “We can have a strategic conversation that any CEO or any board wants to have. We have foot soldiers out in the field talking to both small companies and the big ones.”
‘Four Horsemen’
It’s a reputation Weisel has built up since at least 1971, when he helped start Robertson, Colman, Siebel & Weisel. In 1978, Weisel took half the San Francisco company and renamed it Montgomery Securities, which helped shepherd dot-com IPOs, including Yahoo! Inc.’s 1996 offering. Along with local rivals Hambrecht & Quist and Robertson, Stephens & Co., Montgomery handled a boom in tech deals in the 1980s and 1990s.
Together with Alex. Brown & Sons, the firms made up what Robertson Stephens founder Sandy Robertson called “the four horsemen” of West Coast technology finance. Eventually, they were all purchased by commercial banks.
Weisel sold Montgomery Securities in 1997 to what would become Bank of America Corp. A year later, he founded Thomas Weisel Partners. The firm was one of the chief underwriters of Crocs Inc.’s IPO in 2006, advised Nuance Communications Inc.’s follow-on stock offerings in 2003 and 2008, and last year advised Dainippon Sumitomo Pharma Co. in the $2.3 billion purchase of drugmaker Sepracor Inc.
‘Stuffing’ Probe
It hasn’t all been smooth sailing. In May, his company said it was facing a probe that alleged a former employee was “stuffing” $15.7 million of securities into client accounts without getting their permission. Shares of his firm also tumbled over the previous four years, hurt by a slump in dealmaking and the shift of investors to electronic trading platforms. Before the Stifel takeover was announced, the stock was down 82 percent from its 2006 high of $23.66.
Stifel, founded as a securities firm in St. Louis in 1890, focused on Midwestern customers for most of its history. The company was one of the first to arrange financing for Emerson Electric Co., the St. Louis-based manufacturer of electrical components, and Oklahoma’s Marlend Oil, which eventually became part of ConocoPhillips, according to Stifel’s website.
Weisel prides himself on understanding the dynamics of technology, consumer and health care -- knowledge that was mostly absent at Stifel, which has catered to financial services, industrial, aerospace and education markets.
Growth Areas
“We can’t be the kind of firm we want to be without being in tech, consumer and health care,” Stifel Chief Executive Officer Ron Kruszewski told analysts in April, when announcing the Thomas Weisel Partners acquisition. “It expands us into these key growth sectors of the global economy.”
For now, Stifel remains a small participant in those markets. Even including Thomas Weisel Partners deals, the company would rank 30th this year among advisers in the technology, health-care and consumer industries, according to data compiled by Bloomberg.
His rivals include Frank Quattrone, CEO of San Francisco- based Qatalyst Partners, who advised 3Par Inc. in its acquisition by Hewlett-Packard Co. Two New York-based advisory firms, Moelis & Co. and Lazard Ltd., also vie for deals.
The biggest competition comes from the marquee investment banks, with Goldman Sachs at the top of the list. Smaller banks have a better shot consulting on merger deals than IPOs, said Ted Driscoll, technology partner for Claremont Creek Ventures, a venture capital firm in Oakland, California.
Local and Familiar
“When you’re talking about an IPO, you want the reach of a Goldman,” Driscoll said. “If it’s an M&A, that’s different. We would rather deal with people who are smaller, local, familiar to us, and know the space that our companies are looking to be acquired in.”
Weisel’s office is a showcase of his outside interests, decorated in modern art, skiing memorabilia and Tour de France jerseys. He has supported the San Francisco Museum of Modern Art, the U.S. Ski and Snowboard Team Foundation and Lance Armstrong’s racing team. Weisel is an athlete himself: He tried out for the Olympic speed-skating team in 1959, and competed in skiing and cycling events for decades.
Weisel, who grew up in Milwaukee, graduated from Stanford University in 1963. He got his MBA from Harvard Business School before returning to the West Coast to join William Hutchinson & Co. as one of the original employees, the first of several securities firms Weisel helped build during his career.
Weisel, who’s been married and divorced three times, has three sons and two daughters.
‘Where We Live’
At his current job, Weisel is reaching out to business leaders, seeking deals with the world’s biggest technology companies and venture capitalists, he said.
“We are selling companies every week or every month to IBM, to Cisco, to Oracle, to Microsoft and to EMC,” he said. “The VCs want to know: Where are the $300 million, $400 million and $500 million deals? And that’s where we live. We know all of the transactions.”
Robert Weiler, the former CEO of Phase Forward Inc., tapped Weisel to help sell his company. Oracle Corp. agreed to pay $685 million for the Waltham, Massachusetts-based business in April. Years earlier, Weiler was taken with Weisel’s expertise.
“I met him in 2002, when I first joined Phase Forward as CEO, and he visited us as an emerging company,” Weiler said. “He came in and said, ‘Let me tell you about your industry.’ He knew about our space, our competitors and the challenges we face.”
Phase Forward
Weisel and his bankers went on to handle Phase Forward’s IPO and secondary stock sale, and advised them on five acquisitions, Weiler said.
Weisel relies on that kind of knowledge to win business, said Dick Kramlich, general partner and co-founder of venture firm New Enterprise Associates in Menlo Park, California.
“Thom knows the major movers, cold,” Kramlich said in an interview. “And they know that if Thom gives you his word, he will die trying. He will get something public, get a merger, iron out a problem.”
Now Weisel is counting on transferring that reputation to Stifel. That’s what’s driving him to keep working, years past retirement age.
“Why walk away?” he said. “I’d like, over the next five or 10 years, to have Stifel inherit all of the goodwill we’ve built. That’s the motivating factor.”
To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Alec McCabe at amccabe@bloomberg.net
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