Thom Weisel’s new firm may be the fastest-growing investment bank ever.
By Justin Schack
February 2001
Institutional Investor Magazine
And he says it’s built to last. But can it survive a technology bear market?
Thomas Weisel says he’s a changed man.
Renowned for phoning subordinates in the wee hours of the morning to bark out orders, the famed Bay Area technology banker now talks a new game. He spends far more time at home with his 2-year-old daughter and 5-year-old son than he did with his children from a previous marriage. He has reconciled with old partner Sanford Robertson, after feuding for decades (see box). And he vows not to repeat the mistakes that cost him control of Montgomery Securities, the San Francisco boutique he sold for a small fortune to NationsBank (now Bank of America) in 1997.
Sometimes, though, he just can’t help being the old Thom Weisel.
Last April Weisel was introduced to Jozef Straus, the newly named CEO of JDS Uniphase Corp., a longtime client. Almost immediately, the two executives began shouting at each other. Weisel’s new firm, Thomas Weisel Partners, was advising the optical networking equipment maker on its pending acquisition of E-Tek Dynamics, and Straus had just learned that the firm was helping archrival SDL buy a company he coveted.
“We were yelling at each other. But it was the best thing to do. The yelling turned into a discussion, and we hit it off,” says Straus. Three months later Weisel Partners helped bring JDS and SDL together in a $41 billion marriage, the largest technology merger in history.
It’s that old Thom Weisel - persuasive and charismatic, combining in-your-face competitiveness and bulldog determination - who built Montgomery into the crown jewel of growth-oriented investment boutiques in the mid-1990s. Those same qualities are once again vividly on display, driving Weisel’s new firm, whose executives like to claim theirs is the fastest-growing investment bank in history.
It may be no idle boast. What Weisel has done in the two short years since he decamped in a rage from BofA is nothing short of remarkable. From a dead start, the new firm boasts more than 800 employees across four lines of business: banking, sales and trading, private equity and wealth management. With a client roster that includes Cisco Systems, Exodus Communications, Oracle Corp. and Yahoo!, and with last year’s revenues logging in at some $470 million - a level that Weisel didn’t expect to reach for five years - Weisel Partners is already bigger and nearly as profitable as Montgomery ever was.
The firm turned a profit in March 1999, its second month of operation, and hasn’t looked back. People close to the private partnership estimate 2000 earnings, though not disclosed, at about $100 million. Sources say that the firm is capitalized at $165 million.
At an age when most of his contemporaries are working on their short game - he turns 60 this month - Weisel craves only more action. Tireless, self-confident, often unguarded, he’s a dynamo fueled by a need to compete and stoked in no small part by a desire for revenge against BofA, which, he insists, betrayed him. “They made their own bed by breaking the merger agreement,” Weisel says. “Every time we have a victory, it’s just the opposite for them.”
And there have been victories aplenty. In technology mergers the firm ranked seventh last year, ahead of such established firms such as Bear, Stearns & Co., Lehman Brothers, Salomon Smith Barney and, yes, Banc of America Securities, according to Thomson Financial Securities Data.
A nationally ranked speed skater in his youth and still an avid cyclist, Weisel leads by example. He energetically peppers clients with phone calls and visits, while working with such organizations as conservative think tank Empower America, the U.S. Ski Foundation and the U.S. Cycling Team. “His ability to multitask is just amazing,” says Lance Armstrong, the defending two-time Tour de France champion cyclist who credits Weisel, a major financial backer of the U.S. Cycling Team, with supporting his comeback from cancer. “I flew from San Francisco to New York with him recently, and the whole time, he’s on the phone, working on deals. Then he’s talking art with people, discussing cycling and wine with me. The guy can put a lot on his plate.”
“Thom always worked harder than anyone else at the firm,” adds Jerome Markowitz, Weisel’s former No. 2 at Montgomery. “So if he said, ‘Come on, we’re going to jump off this building,’ people would follow him.”
And follow him they did. Fully one fifth of Weisel’s employees - including 35 of its 67 partners - migrated from Bank of America after Weisel lost his fight to retain control of key Montgomery businesses. At a time when huge balance sheets and global scale were the rage, Weisel set out to build the ultimate boutique, recruiting heavily from the other growth shops that had been swallowed up by larger institutions.
Such Wall Street institution-building was thought to be passâ. High finance these days is supposed to be dominated by global brands, not conducted by “four guys and a flip chart” - which is how Weisel describes what his firm looked like two years ago. His and the other growth boutiques - Alex. Brown & Sons, Hambrecht & Quist and Robertson Stephens - sold out because they needed more resources to compete with the biggest financial institutions.
But for all its success, Weisel Partners is playing a high-stakes game of chicken. At root the firm represents an all-or-nothing bet on the New Economy at a time when many have lost faith in it. Weisel has toiled in the sector for decades - long enough to have seen more ups and downs than most bankers, and he remains a true believer. He speaks grandiloquently of the New Economy’s “tailwinds” as the firm’s organizing principle (its triple-flourish logo is meant to represent those tailwinds). But even he didn’t expect the winds to start blowing back so fiercely or so quickly. The U.S. economy is slowing, and despite a 15 percent rebound in January, the Nasdaq composite index, the growth-stock bellwether, continues to sputter after recording its worst-ever year.
Venture capital has all but disappeared; seed-stage funding plunged 81 percent in the third quarter from a year earlier. IPO flow has dried up and with it a key source of corporate finance revenue. Weisel’s firm participated in just two IPOs in the fourth quarter.
With its technology focus Weisel Partners is more vulnerable to the downturn than bigger, more diversified firms, many of which are already sharpening their axes. Credit Suisse First Boston, for example, is mulling over cuts of up to 10 percent of its banking force.
Meantime, growth doesn’t come cheaply. In December Weisel Partners christened a new trading floor in its San Francisco headquarters. And the firm has spent millions to renovate its offices in New York - in the historic Lever House on Park Avenue - and in Boston, in part to accommodate its swelling ranks. Despite the market, it wants to grow head count an additional 10 percent by year-end. “Frankly, we’re not changing any of our projections,” says Weisel. “We’ve set goals for the year, and I think we have a pretty good shot at achieving them.”
Rumors dog Weisel that he may, once again, be tempted to sell out. The firm dismisses such talk out of hand. But signs of strain are showing in Weisel’s competitive hothouse. Last year the firm pushed out e-commerce research analyst Faye Landes and technology hedge fund manager Mark Waterhouse, both highly respected partners, just months after trumpeting their hires from big competitors. And several other analysts and bankers left after clashing with superiors over what they saw as constantly changing assignments and reporting lines.
Weisel chalks up the turnover problem to growth pains and has recently installed his former chief of staff at Montgomery, Blake Jorgensen, as chief operating officer. But Weisel’s style remains as inspiring and as ruthless as ever.
“Thommy is the Bill Walsh of investment banking. He’s got the ability to get bright people to produce way above their capabilities,” says one former colleague, referring to the former coach of football’s San Francisco 49ers. “But if you lose a step, you’re gone. Steve Young is in to replace Joe Montana.”
Case in point: Last month Weisel shunted aside Frank Dunlevy and J. Sanford Miller, the former co-heads of investment banking at Montgomery, who were two of the original “four and a flip chart.” According to insiders, they were no longer producing at the level Weisel expected. A spokeswoman for the firm counters that the pair, who became special limited partners, always intended to reduce their roles over time.
Weisel remains characteristically upbeat, insisting that his firm will survive the tech slump, thanks to its structure as a merchant bank. By focusing on principal investing and merger advice, rather than solely on IPO underwriting, Weisel says that he will avoid the underwriting woes without having to store up expensive capital. Keeping a lid on compensation helps: Partners are paid a $60,000 base salary but share in the firm’s profits. No one receives the kind of guaranteed long-term contracts that plague big banks in downturns. As Weisel likes to point out, Montgomery never had a losing quarter.
“One important thing I learned from Montgomery is that the pure agency business is not scalable,” says Weisel. “You’ve got to add people to build revenue. You can’t leverage the intellectual capital you have inside the firm. We leverage it by doing private equity and strategic advisory.”
He has made waves in M&A advisory work. But the jury is out on private equity. The firm so far has raised $2 billion in four funds and has invested nearly $900 million, including about $100 million of its own money - a heady pace. But none of the 80 portfolio companies have made it to market yet - hence no windfall profits and no lucrative banking assignments. With the IPO market shuttered, Weisel may have to carry these investments longer than expected.
But no bank focusing on high-growth companies, however well run, can escape the equity market for long. And even Weisel, a man of action not given to self-reflection, admits to a tinge of anxiety: “For private companies, there’s a lot of angst right now. Where are they going to get their next financing? Are they ever going to get to go public? There are a lot of major issues to contend with, for them and for us.”
Unlike most folks, Thom Weisel came to California in search of ice.
The eldest of three children, Weisel grew up in Milwaukee, cycling, speed skating and playing football. His father, a heart surgeon who played semiprofessional hockey while attending Harvard Medical School, had high expectations for his children. “I’d say he set high standards for himself,” says Weisel. “And he expected me to be the same way.”
Entering Stanford University in 1959, Weisel spent his afternoons training in hopes of making the 1960 Olympic speed-skating team. He failed to qualify but graduated from Stanford in 1963 with a degree in economics and a love of the Bay Area, where he returned after graduating from Harvard Business School in 1966. His hopes for a career in finance, however, got off to a slow start. “I literally couldn’t find a job for a year,” he recalls.
He landed a position in the planning department of San Jose-based conglomerate FMC Corp., before moving on to the securities industry in 1967, joining a fledgling firm, William Hutchinson & Co., as a research analyst covering paper and forest products. Pushing his bosses to grow the firm faster, he clashed bitterly with the top partner.
In the fall of 1971, Weisel jumped to Robertson, Colman & Seibel after meeting fellow Milwaukee native Robert Colman at a party. Weisel launched a successful institutional sales and trading operation and became a name partner in 1974. But he soon began feuding with founding partners Robertson and Colman, who didn’t share his desire for aggressive growth. In 1978 the founders left to form the firm now known as Robertson Stephens.
Weisel, now in charge, renamed the partnership Montgomery Securities, retained its New York Stock Exchange seat and fashioned a rawboned corporate culture around his own personality. Montgomery was an entrepreneurial, dynamic institution. By the 1990s partners drew annual salaries of $50,000, but most held a 1 percent stake in the firm, which earned them $1 million in a good year. (Weisel owned 10 percent, and several other senior partners had stakes of 2 or 2.5 percent.) Talented new MBAs frequently made partner within a year or two, a far shorter track than in New York.
Weisel was also lucky. For years, Wall Street had mostly ignored Silicon Valley’s start-up companies. The boutiques known as the four horsemen or HARMs - Hambrecht & Quist, Baltimore-based Alex. Brown, Robertson Stephens and Montgomery - dominated high-growth banking. As usual, Weisel was the most ambitious. In addition to technology, he pushed into health care, business services and financial services.
Weisel worked long hours, turning his office into an extension of his home. Many works from the CEO’s expensive personal collection of modern art lined Montgomery’s walls. Every day, Weisel arrived at work with a special lunch prepared by the family chef. For relaxation he favored high-intensity athletics, becoming a top amateur skier and cyclist. His vacation retreat in Park City, Utah, serves not only as a getaway but also as an important place to network - and work out - with Silicon Valley moguls. “He’s a very strong cyclist,” says Armstrong. “When we go out for rides together, it’s not just fooling around. You can tell he’s very serious.”
He would need all his stamina. By the 1990s Wall Street firms had descended en masse on Silicon Valley. As the start-ups financed by the boutiques matured, they needed not just equity financing but the loans, high-yield bonds and other securities peddled by bigger, better-capitalized banks. Montgomery began to lose ground. “Clients were asking us for things we couldn’t provide,” recalls former Montgomery COO Markowitz.
Weisel sought a partner. At first he hoped to sell a minority stake, allowing Montgomery to remain competitive but independent. Larger firms balked at this arrangement. After talking to about a dozen potential acquirers, Weisel finally agreed in June 1997 to sell the firm to NationsBank for $1.2 billion.
NationsBank had a reputation for aggressive cost-cutting and hands-on management. Concerned, Weisel insisted on a lengthy merger agreement that spelled out exactly how Montgomery would fit into the large bank. It gave the former partners control of fledgling businesses, such as junk bonds, and the final say on compensation for securities professionals.
The partnership quickly soured. Initially, it was the little things: Montgomery’s marketing slogan, “The Power of Growth,” was trashed because NationsBank didn’t want to be perceived as “powerful.” The breaking point came when NationsBank executives seized control of Markowitz’s budding high-yield operation, dismissing Montgomery staffers and moving the business from New York to NationsBank headquarters in Charlotte, North Carolina. When Weisel called to complain, citing the merger agreement, NationsBank CEO Hugh McColl Jr. famously replied: “I don’t understand your problem. I thought we bought you.”
Weisel continues to feel betrayed: “I gave them more credit than I should have. I figured that they had learned from their mistakes. They had tried at least three other times to bring in big-time Wall Street people and build a real investment bank, and it never worked. One of the first things out of Hugh McColl’s mouth when we first met with him was, ‘You know, we haven’t been able to get it right. We want you to take over and drive the bus.’ That’s a direct quote.”
Weisel left in September 1998, after months of battling and after persuading NationsBank to release early $360 million in stock, meant to be paid over three years. (He netted $120 million in all from the sale.) There continues to be no love lost between Weisel and his former acquirers. In early 1999 Bank of America sued Weisel Partners for raiding employees. The case, settled out of court earlier this year (the terms were not disclosed), only fueled the rivalry further. BofA has spent freely to build its securities arm under investment banking head Carter McClelland but has failed to mount a serious challenge to such major competitors as Goldman, Sachs & Co. and Morgan Stanley Dean Witter. It ranked 15th in IPO underwriting last year and 13th in M&A, just ahead of Weisel Partners’ 14th.
“We are pleased with the progress in building our equity and M&A businesses, which have almost tripled in size since we acquired Montgomery Securities,” says Edward Brown, president and head of global corporate and investment banking at BofA, through a spokeswoman.
Then 57, Weisel, of all people, thought about calling it quits. “It was definitely the most frustrating year of my life, bar none,” he recalls. “I thought a lot about just starting a small money management operation, or a small private equity firm. Or doing nothing for a while.”
Fat chance. He is Thom Weisel after all - a man whose idea of taking it easy is a 100-mile bike ride up hills. Instead, he began to see many possibilities. Even as the growth boutiques sold out to big firms, the kind of high-growth companies these firms specialized in were multiplying exponentially.
Says Weisel, “I saw a massive opportunity both in terms of how the explosion in technology was going to influence the economy and the capital markets and then in terms of the gaping hole all these acquisitions of boutiques by big banks has made.”
In the fall of 1998, just weeks after leaving Montgomery, Weisel was back at work. First he assembled an all-star board of advisers, including Yahoo! chairman and CEO Tim Koogle, Empower America co-director and former GOP vice presidential candidate Jack Kemp, high-tech corporate lawyer Lawrence Sonsini and former Microsoft Corp. CFO Michael Brown. Then he signed up 20 venture capital and private equity firms as strategic investors, in addition to GE Investments and two other pension funds. Last year the California Public Employees’ Retirement System invested $100 million for 10 percent of the firm.
Weisel Partners made a string of high-profile hires, including Landes, Waterhouse, trading head Timothy Heekin (formerly of Salomon Smith Barney) and investment banker Steven Bottum (formerly of Bankers Trust Alex. Brown). Altogether 161 former Montgomery employees, including research director Ned Zachar, and top bankers Dunlevy and Miller, signed on.
Weisel has fashioned a unique organizational structure. Professionals from private equity, corporate finance, M&A and research are linked on a series of “tiger teams,” corresponding to various emerging industry sectors targeted by the firm. Each team has its own business plan and profit-and-loss statement. Compensation for nonpartner members of the team is based in part on earnings generated by the group. Equity analysts are expected to spend up to 40 percent of their time researching private companies. Private equity professionals are rewarded not only for their funds’ performance but also for securities offerings or mergers and acquisitions they might suggest for a portfolio company.
“You have an alignment of interests among groups that at other banks just don’t work together,” says Richard Hayes, who helps oversee CalPERS’ $16 billion in private equity investments.
The firm wasted little time making a splash in mergers work, advising Yahoo! on its $4.7 billion purchase of GeoCities in May 1999. Other big deals have included JDS Uniphase’s record-setting purchase of SDL and its $15.7 billion acquisition of E-Tek; Cisco’s $266 million acquisition of Active Voice Corp.; and Oracle’s sale of interactive television assets to nCube and Thirdspace Living. In 2000 Weisel Partners advised on 33 transactions worth $72.6 billion.
Some deals, such as JDS-E-Tek and Yahoo!-GeoCities, stem from client relationships that Weisel nurtured over many years. Others, namely the Cisco and Oracle deals, can be attributed to the hiring last February of Mark Shafir, formerly head of technology investment banking at Merrill Lynch & Co. “We see huge growth in the M&A arena as the public markets become a less viable exit strategy for entrepreneurs and their backers,” says Shafir, who heads Weisel Partners’ investment banking business.
The firm’s underwriting business has been less spectacular. Although Weisel insists that “we’re not in this business just to be a co-manager of choice,” the firm’s IPO business pretty much amounts to just that. Weisel Partners lead-managed six IPOs in 1999 and just three in 2000, to rank 20th. Among these deals are e-tailing bomb VitaminShoppe.com, down 97 percent from its $11 offering price, and online marketing services provider Rainmaker Systems, down 85 percent from its $8 debut. To be sure, the firm has served as a co-manager for 86 other deals since its inception, and underwriting represented 28 percent of its 2000 revenues. But new-issue activity has slowed even more since the Internet bubble collapsed in mid-2000 - Weisel Partners, after all, took part in just two IPOs during the fourth quarter.
Weisel insists that the firm can withstand a downturn. One reason, he points out, is that it is still scaling up key businesses, which allows growth even as bigger competitors slow down. This would seem counterintuitive, but Weisel has benefited from fortuitous timing.
The firm is adding clients in institutional brokerage, for example, its largest single revenue producer - at 38 percent of the total. The business, despite market ructions, is growing, thanks to steady increases in trading volume. In research, sales and trading, Weisel will expand coverage, from 250 stocks currently to 400 by the end of this quarter.
And Weisel Partners recently began a joint venture with Scudder Kemper Investments, dubbed Scudder Weisel Capital, aimed at gathering assets from high-net-worth individuals. The effort will develop alternative investment funds for wealthy investors and sell the products through both Weisel’s private client brokers and Scudder Kemper’s distribution network. Overall, through its 33 private client representatives in San Francisco, New York and Boston, Weisel Partners has $7 billion in private banking assets under management, a modest source of stable, fee-based revenue. It hopes to grow that asset base to between $30 billion and $40 billion within the next few years.
The success of Weisel Partners’ private equity operation is much harder to judge. Ideally, private equity can be a powerful revenue generator; firms pocket management fees, reap profits on successful investments and often collect banking assignments from portfolio companies. (The 20 venture capital and private equity firms Weisel signed on as strategic partners also have helped the firm’s deal flow.) Weisel would like to double by next year the $2 billion in funds it has raised. But so far the firm has yet to exit any of its portfolio companies, and it has not marked to market any of its holdings. Such markdowns have caused a number of major banks, Chase Manhattan Corp., for example, to take earnings hits.
Timing has helped private equity, too. Weisel began making private equity investments only in late 1999: Thus the firm missed much of the dot-com mania (although it did manage to get in on a few doozies, like Kozmo.com).
Even a lone home run can pay for a lot of overhead. One company that the firm is banking heavily on is Oceanport, New Jersey-based optical network equipment maker Tellium. Weisel Partners has invested $21 million in Tellium since December 1999, amassing a 9 percent stake. The company was put on the IPO calendar in December, with Weisel as lead underwriter. At the targeted $14 offering price, the firm’s investment would soar by about 1,000 percent, to $233 million. But Tellium, a victim of soured market sentiment, is still waiting at the gate.
Weisel Partners also is targeting leveraged buyouts with its $1.3 billion private equity fund - and has begun working on an LBO of a telecommunications company. As the tech sector matures, more-established companies with stable cash flow - crucial for paying down the debt involved in an LBO - may end up being undervalued in a more critical stock market. Such investments, provided the anemic leveraged finance market picks up, could also help the firm weather a down cycle for technology.
A few personnel dustups also raise concerns. Consider the firings of e-commerce analyst Landes, formerly of Salomon Smith Barney and ranked for years as among the best in retailing by this magazine’s All-America Research Team, and hedge fund manager Waterhouse, who came to the firm after posting an impressive record at Wellington Management Co. Landes, who would not comment for this article, was dismissed after just four months. Sources say she disagreed with management about which companies and sectors she should follow. She now covers e-commerce for Sanford C. Bernstein & Co. “It’s just unheard of to fire someone like her,” says one longtime Wall Street recruiter. “To me, that’s an indication that all is not well inside that firm.”
The firm announced Waterhouse’s hire in January 2000. But the rest of the team running the firm’s $77 million Tailwind Investment Partners hedge fund, including co-fund manager Tim Keefe, didn’t take to Waterhouse, who was gone by October. Attempts to reach Waterhouse were unsuccessful. Several other senior analysts and bankers, apparently uncomfortable with the “tiger team” structure and the on-the-fly changes in coverage, left for guaranteed deals at larger investment banks. Among the notable who departed were retailing analyst Christopher Vroom and Internet analyst Gretchen Teagarden.
“There’s no question that in the first two years, we’ve had more indigestion than we would have liked,” concedes Weisel. And he says that the firm has made the turnover issue a high priority. It recently rolled out an options plan that gives every employee an equity stake, and it also allows certain higher-paid staffers to co-invest, on a leveraged basis, with the firm in private equity deals. Additionally, Weisel named Jorgensen as COO and hired Ann Akichika from J.P. Morgan H&Q to be COO of the investment banking unit. Akichika has been working with Shafir and corporate finance head Michael Ogborne on year-end reviews and other administrative matters.
“Thom is on the road with clients so much that he probably needs a chief operating officer to run things day to day, to handle decisions on the home front,” says Edward Glassmeyer, a Park City buddy of Weisel’s and founder of Oak Investment Partners, a venture firm and strategic investor in Weisel Partners.
A bigger question may be what Weisel ultimately wants to achieve with the firm that likely will be his final professional legacy. When he launched Weisel Partners, he insisted that he wanted to build an elite institution, not a giant investment bank. Weisel says there’s “not a chance” that the firm will be sold, although a public offering remains an option. Also possible, he says, is selling a 1 to 3 percent stake to a foreign bank looking for a strategic presence in the U.S. market.
In the best-case scenario, Weisel navigates through today’s technology wreckage and is right back where he was three years ago with Montgomery - with a growth banking business as big and as good as many bulge-bracket firms’ but without the full range of weapons, like junk bonds and loans, that led him to sell out to NationsBank in the first place.
Weisel’s top investment bankers are a competitive bunch. They are likely to quickly chafe at losing out on deals to better-capitalized rivals with broader product offerings. Already you can hear the sound of backsliding.
“Look, we don’t want to say we’ll never step up and provide other products for our clients,” asserts Bottum, who joined Weisel Partners in December 1998 from Bankers Trust Alex. Brown. “We’re talking about a number of things that might fulfill those needs, like providing a private-label debt product with the help of outside institutions.” He cautions, though, that such discussions are sporadic at best and that the firm remains focused on its core private equity and merger advisory businesses.
And don’t forget, Weisel is as young a 60 as there is, but he’s still 60. It’s unclear whether he can build a bank that outlasts him - or if he cares to. Will Weisel, two or three years hence, be content for Weisel Partners to remain a merchant bank? The Bank of America experience remains vivid. And he says he’s learned his lesson.
But, sometimes, Thom Weisel just can’t help being himself.
Burying the hatchet
Of all possible occasions for Thomas Weisel and Sanford Robertson to bury the hatchet, perhaps none could have been more appropriate than the initial public offering of the aptly named Pain Therapeutics, which made its debut July 14.
Before they fell out two decades ago, the pair of financiers had turned the Bay Area’s Robertson, Colman, Seibel & Weisel into a high-powered specialist in taking high-growth start-ups public. But the two clashed over internal firm politics and parted ways - Robertson formed the investment bank now known as Robertson Stephens while Weisel renamed the old partnership Montgomery Securities. The pair competed fiercely for clients and prospective hires.
Their rivalry quickly became legendary in tightly knit San Francisco. Both socially active art lovers, the two financiers exchanged only the coolest of small talk at gallery openings and museum benefits. They even butted heads politically: Weisel is a staunch Republican who has co-chaired conservative think tank Empower America; Robertson proudly displays a photograph of himself with president Bill Clinton on a table in his office and was a strong backer of former vice president Al Gore’s failed presidential bid.
But there’s nothing like a business opportunity to heal old wounds. Pain Therapeutics, a San Francisco-based biotechnology concern on whose board Robertson sits, decided to shift its IPO underwriting duties from Robertson Stephens to Thomas Weisel Partners when research analyst Donald Ellis moved from the former firm to the latter. Robertson, now a private equity investor, blessed the move. And it paid off - Pain Therapeutics went public at $12 per share, nearly doubled in first-day trading and now changes hands for about $15.
Robertson phoned Weisel’s syndicate desk the day of the deal at the same time that Weisel called in from Europe, where he was following the Tour de France. Recalls Robertson: “They hooked us together, and I said, ‘Thommy, I want to congratulate you. You guys did a terrific job.’”
A few weeks later Weisel returned the gesture. An official at the California Public Employees’ Retirement System, one of the world’s largest pension funds and a 10 percent owner of Weisel Partners, asked Weisel whether he’d consider it a conflict if CalPERS invested in a fund being raised by Robertson’s new firm, Francisco Partners. Weisel put in a good word for his old colleague, helping cement the investment.
“I figured life is too short,” says Weisel. “We get along really well right now. There was a time, probably a couple of decades, where we were natural archrivals, pretty bitter at times. But I think Sandy was very pleasantly surprised with the job we did, and we’ve tried to do a fair amount of business with his new firm.”
Still, don’t expect to see the two cycling the hills of San Francisco together anytime soon. “Time heals a lot of wounds,” says Robertson. “But our friendship is now very much a business relationship.”
