The investment banking brand was preeminent until it got purchased and the M&A market tanked

September 3, 2010 — 2:18 PM UTC by Brooke Southall

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In another sign that the M&A market still has not rebounded after the financial crisis, Putnam Lovell, once the pre-eminent national M&A firm, has disappeared.

Jefferies & Co., a New York-based investment bank that purchased Putnam Lovell at the peak of the M&A market in 2007, has phased out the brand name, downsized the unit, and consolidated its San Francisco M&A offices to New York and London.

The inheritor of the Putnam Lovell mantle is a small firm established earlier this year by Keith Mitchell and Roger Hartley. They were former Putnam Lovell bankers who struck out on their own, Hartley working in San Francisco and Mitchell in Atlanta. See: New M&A firm with Putnam Lovell alumni appears on the wealth management landscape

But even Hartley allows that M&A market has been – after good signs early in the year — somewhat subdued and “spotty” since the flash crash occurred. The firm just served as exclusive advisors to Montag & Caldwell, which manages $14 billion, in their management buyout from BNP Paribas Fortis.

M&A activity could start to hum if the stock market picks up this fall and shows signs of stabilizing. Firm valuations are dependent upon the share prices of stocks because most charge fees based on assets and principals are reluctant to sell in down markets.

Brand kill

The duo wasn’t looking to staff up at Mitchell Hartley Advisers LLC, but the firm did add Jeff Bechtel, to its roster this week. Bechtel, 36, was the last former Putnam Lovell banker working for Jefferies in San Francisco in its wealth management M&A group. His hiring brought Putnam Lovell’s disappearance – Jefferies officially killed the brand last year — to light.

Since Jefferies consolidated its Financial Institutions Group to New York and London in March, Bechtel had been biding his time and considering his options.

“I had a baby on the way, a wife with a great job in San Francisco. We had no intention of moving anywhere else.”

Hartley said he opportunistically added Bechtel because he foresees an improving market and he didn’t see another chance to hire someone as talented and trustworthy as his former associate coming along soon. Bechtel is both strong with M&A skills and in handling clients, he says.

The group that’s reconstituted the Putnam Lovell presence has a wide-open playing field on the West Coast.

Being in the same time zone as buyers and sellers is an edge over New York investment bankers, Bechtel says. Being part of an independent firm is also helpful to get across a message of being conflict-free.

Charles “Chip” Roame, managing principal of Tiburon [Calif.] Strategic Advisors, said in an earlier interview that both men have the kind of experience that should serve them well in the market.

“Mitchell and Hartley bring fine pedigrees including the combination of operating experience and deal experience,” he says. “I see their new firm as a perfect solution for middle-size asset managers looking to exist over multiple years and wanting a strategic counselor around to advise along the process.”

Yet, they face a steep climb.

Jeff Spears, CEO of Sanctuary Wealth Services LLC, says that changes in the M&A market present a challenge for any investment bankers. There are fewer profitable deals to facilitate.

Off a cliff

“The fee pool for M&A in the wealth management space has fallen off a cliff,” he says. “Any transactions that have happened have been through rollups and then there’s no investment banker or the company pays the investment banker as an introducer and it’s much lower.”

Indeed, Rich Gill, vice president of business development and acquisitions for Focus Financial, one of the industry’s largest aggregators of RIA practices, says his New York-based company makes zero use of M&A specialists.

“We’ve actually never used M&A consultants,” he says. “It’s not to save money, it’s just that we view structuring deals to be part of the DNA of Focus. It’s one of the skill sets that we prize and we believe we have built up a unique expertise in putting together RIA deals.”

It’s a far cry from the days of the white-hot M&A market. Putnam Lovell was founded about 20 years ago and completed about 150 mergers, acquisitions and capital-raising events during the course of its existence, according to Jefferies’ website.

“They certainly were the go-to firm if you had anything to do in that space,” Spears says. “Putnam was the industry subject matter expert.”

Putnam Lovell’s West Coast market presence has been waning for a few years, according David Selig, CEO of Advice Dynamics Partners of San Francisco.

Tight knit community

“It’s a pretty tight knit community among M&A advisors and investment bankers to the wealth management industry and, honestly, I haven’t come across them in the past couple years,” he says.

Tom Tarrant, a spokesman for Jefferies, says that his company still has 12 investment bankers in its financial institutions group with six located in New York and another six in London. His company still has 20 investment bankers in San Francisco and another 30 in Foster City, Calif., but they cover non-financial industries.

Hartley and Bechtel have established an office together. Hartley was working from his hometown of Santa Rosa. But because Bechtel lives in San Francisco, they chose an office in Larkspur as a commuting midpoint – each one commuting [Bechtel by boat] about an hour to Larkspur.


Mentioned in this article:

Mitchell Hartley
Mergers and Acquisition Firm
Top Executive: Keith Mitchell

Advice Dynamics Partners
Consulting Firm
Top Executive: David Selig

Sanctuary Wealth Services
Specialized Breakaway Service
Top Executive: Jeff Spears



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