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Paul Weisbrich Makes Cross-Border Deals Soar

Cross-border deals have suffered with the broader market in the past two years, but Paul Weisbrich’s pipeline is full. U.S. and overseas buyers and sellers are warmer to one another than a decade ago.

Investment banker Paul Weisbrich’s Passion for airplanes is rooted in a childhood spent in Westchester, California, not far from where aviator Howard Hughes had his manufacturing plant and airport. As senior managing director and head of the aerospace group at Costa Mesa, California–based McGladrey Capital Markets, Weisbrich specializes in middle-market cross-border deals.

That’s why British metals manufacturer Hampson Industries turned to him for urgent advice six years ago. To diversify its product line and customer base, the West Midlands company wanted to buy Grand Prairie, Texas–based Texstars, a leading producer of canopies for combat aircraft, including the F-16 Fighting Falcon. Texstars had been put on the market by private equity shop American Capital of Bethesda, Maryland, but to Hampson’s chagrin the U.S. firm didn’t shortlist its bid. American Capital was uneasy about a cross-border deal with a company that was little understood across the Atlantic.

The resourceful Weisbrich set out to get Hampson back into the auction. Thanks to a relationship with the seller’s adviser, Charlotte, North Carolina–based Edgeview Partners — a middle-market investment bank like McGladrey — he helped Hampson craft better pricing and deal terms, and it won Texstars for $41 million. Weisbrich and his team then sourced three more U.S. companies in the advanced composite materials industry and advised Hampson on their acquisition. As a result, the company has transformed itself from a basic metals supplier into a force in the burgeoning advanced composites market, posting double-digit average annual revenue growth since 2004. “Paul is a great ambassador for us and always kept our name at the forefront,” says Howard Kimberley, finance director at Hampson.

Weisbrich, 50, who has an MBA from the University of Southern California, began his career in 1982 as a foreign exchange analyst at Banc of America Securities in Los Angeles. He joined McGladrey in 2001 after a three-year stint running his own M&A firm in LA. Weisbrich has advised some 350 companies, many of them in the aerospace and defense industries.

In a world of blockbuster deals — almost 60 percent of the $1.23 trillion deal volume in the first half of 2010 came from transactions north of $1 billion, Dealogic reports — Weisbrich favors opportunities in the $15 million to $500 million range. Unlike bigger deals, these still revolve around personalities.

“They want to go to dinner and get to know the buyers personally,” he says of entrepreneurs who cherish their companies like babies. “There’s more deal crafting going on, and you have to be half banker and half psychologist.”

In Hampson’s 2007 ac-quisition of Composites Horizons Inc. of Covina, California, Weisbrich deftly maneuvered around a delicate father-son rift. CHI’s founder and chairman, Thomas Hynes, wanted to sell the company to the highest bidder and retire. His son, CEO Jeffrey Hynes, preferred a buyer that would keep growing CHI — ideally, with him in charge. Weisbrich persuaded Hampson to offer a full valuation of $23 million and an earn-out structure that would let Jeffrey Hynes stay on as CEO and keep his hand in CHI’s expansion.

Cross-border deals have suffered with the broader market in the past two years, but Weisbrich’s pipeline is full. U.S. and overseas buyers and sellers are warmer to one another than a decade ago, he says: “European bidders have become more aware of the type of premium to buy a good U.S. company.” The average European premium for U.S. businesses in 2009 and 2010 was 44 percent above the target’s share price a week before any announcement — the highest in ten years, according to Dealogic. “The biases against them on whether they can put the check on the table are gone,” Weisbrich adds.

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