The Fight Of Their Lives

B.E. financial services firms were locked in mortal combat with tough competitors and a bruising

fund, for corporations and municipalities, to provide greater stability and liquidity. He expects the product will add about $1 million in revenues this year, and grow to $500 million in assets under management by year’s end. Williams Capital is seeking out other alternative investments, including making acquisitions in money management. The move is part of Williams’ goal to develop “a more diverse and larger revenue stream.”

Two other investment banks also demonstrated their winning formulas in 2002. Loop Capital Markets (No. 3 on the BE INVESTMENT BANKS list with $5.44 billion in senior/co-senior managed issues) weathered last year’s turbulent financial climate. James Reynolds Jr., Loop Capital’s CEO, says the firm was rewarded for building clients’ trust and solid performance since its inception in late 1997. He recruited top-drawer salespeople, which enabled the firm to increase its penetration into the corporate and municipal bond sectors. This year, the firm will build its corporate finance and equity-trading unit. It has already added three employees and is seeking to add another seven.

Siebert Brandford Shank & Co. (No. 4 on the BE INVESTMENT BANKS list with $4.3 billion in senior/co-senior managed issues) was able to grow its business last year benefiting from several major municipal bond transactions, including the underwriting of water and sewer projects for Detroit and Dallas.

For CEOs managing private equity firms, 2002 was challenging on several fronts. For one, getting capital from skittish investors proved a tough sell. Also, when it came to firms reviewing potential investments, the weak economy made it difficult for venture capitalists to get a true measure of a company’s fundamentals and underlying business performance, while sellers became hesitant because they weren’t sure what the valuations were. “This overhang certainly makes it tougher to get deals done, in terms of everybody agreeing [on] the right valuation,” says Willie Woods, managing director of New York-based ICV Capital Partners (No. 8 on the BE PRIVATE EQUITY list with $130.5 million of capital under management).

Woods also believes, however, that the unpredictable business climate creates opportunities. For instance, companies that would normally sell for a multiple of six to seven times cash flow might now only sell for five to six times cash flow. “If you can get a deal done, it is likely to be on better terms today than it would have been historically,” he maintains.

That’s why ICV had a good year despite the recession. It invested more than $30 million in ventures such as AAMP of America, a Clearwater, Florida-based provider of car-audio accessories, and Chung’s Foods Inc., a Houston-based Asian foods company.

ICV would like to grow annual revenues 10% by completing complementary acquisitions. For instance, Woods believes that AAMP could strengthen its franchise by purchasing a manufacturer that develops similar products and generates annual revenues between $5 million and $15 million. Also, the expansion plan for Chung’s involves an investment of roughly $25 million to pursue other businesses that could enable it to snare a larger slice of the $100 million egg roll
market.

Other firms also grew despite

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