Frank Quattrone, the banker who managed almost 200 technology initial public offerings in the 1990s, said companies should look beyond Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) for banks to lead their debuts.
One of those two firms has been the primary manager on every high-profile technology IPO in the past year, including LinkedIn Corp., Groupon Inc., Zynga Inc. and Yelp Inc., with Morgan Stanley picked to lead Facebook’s upcoming offering. Getting other banks to lead would enable more companies to go public, Quattrone said yesterday at a conference in Menlo Park, California.
“There’s a perception in the marketplace that Morgan Stanley and Goldman Sachs are the only real worthwhile, safe bookrunners,” said Quattrone, who now runs investment advisory firm Qatalyst Group in San Francisco. “I wouldn’t feel forced to impose this underwriting duopoly on yourselves.”
Pen Pendleton, a spokesman for Morgan Stanley, and Andrea Raphael, a spokeswoman for Goldman Sachs, didn’t immediately return calls for comment.
Quattrone, 56, knows about working at the biggest banks. Since joining the investment banking industry in the 1970s, he’s led the technology groups at Morgan Stanley, Deutsche Bank and Credit Suisse Group. He worked on the public offerings of Cisco Systems Inc., Netscape Communications Corp. and Amazon.com Inc.
At Morgan Stanley, where Quattrone stayed until 1996, his group managed about 10 percent of technology IPOs, Goldman Sachs led 5 percent to 10 percent, and the rest were handled by smaller firms, he said.
“For the most part, it was a boutique-dominated practice,” Quattrone said. Today, it’s unheard of for a boutique bank to lead a big deal, he said.
Still, Quattrone said this is the best climate for IPOs since 2000, and may even improve after President Barack Obama signs a law that eases the regulatory burden on companies preparing to go public. For his own business, he’s sticking mostly with the mergers and acquisitions market.
Quattrone founded Qatalyst in 2008 after a five-year hiatus from the industry, during which he successfully defended himself against allegations he hindered an investigation of Credit Suisse’s IPO practices. He said Qatalyst has worked on 36 transactions valued at $65 billion. They include Autonomy Corp.’s $10.3 billion sale to Hewlett-Packard Co., and Google Inc.’s $12.5 billion purchase of Motorola Mobility Holdings Inc.
To contact the reporters on this story: Ari Levy in San Francisco at firstname.lastname@example.org.