Strength In Numbers

By sharing equity with employees and snaring lucrative corporate-bond deals, Christopher Williams has propelled his firm into the big leagues

or divine intervention, in late 1993 Williams had begun to put together a blueprint for establishing a broker-dealer . "It was as if one day we had a flourishing derivative business with an idea of starting a broker-dealer, and then, all of a sudden, this idea of a broker-dealer was all we really had," says Janice Savin, senior vice president on the fixed-income sales desk at Williams Capital. Savin is also Williams’ wife of 12 years.

Plans for the broker-dealer were aggressively accelerated the following year. But the three employees, badly bruised from the derivatives debacle, had to decide whether they wanted to join Williams in his move into uncharted territory or head back to the safety of one of Wall Street’s established firms. "At one point, it seemed tempting to go back to the Street. We all had job offers, but we all had incredible trust and wanted to join him," says Bruce Usher, the firm’s chief operating officer and a colleague of Williams’ for 10 years.

THE MOVE TO DIVERSIFICATION
Any businessman who experiences a Lazarus-like resurrection from financial death learns a lifelong lesson. Williams is no different. "I quickly learned the importance of pursuing varied business lines," he says.

Though Williams’ background was in fixed income, he was determined to learn the equities business. Employees recall a studious Williams poring over books and sitting on the equity-trading desk he set up as he learned every aspect of the business of executing stock trades for institutions. But with no strong institutional clients and no real competitive advantage, the firm had to launch a major marketing initiative to woo major corporations for whom they would provide equity research and trading services.

The firm celebrated a milesto
ne in 1996 when it was added as the first commercial-paper dealer for Colgate-Palmolive, joining the deal with Wall Street heavy hitters Goldman Sachs and Citibank. "It was the first time that any boutique firm, let alone a minority firm, was named as a dealer on a commercial-paper deal," says Usher, who holds a major stake in Williams Capital. "It wasn’t a huge financial milestone. But in terms of respect and credibility, it was as good as it gets."

Currently, Williams Capital offers equity and money-market trading, government-agency and corporate bond trading and underwriting capabilities. Such diversification has paid off handsomely. Revenues in 1998 were more than double those earned in 1997, thanks to the expanded business lines. Williams Capital also added more employees. Meanwhile, its mainstay business of buying, selling or advising companies on securities as capital transactions continued to grow.

As for that dirty word derivative, those products now only represent 10% to 15% of the firm’s revenues. Instead, Williams Capital works with more plain-vanilla financial instruments, such as corporate and agency bonds and securities on the fixed-income side. Those securities don’t give the same big bang to profits, but they can be issued in higher volume and create a predictable stream of revenues.

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