Moelis & Company going public
http://online.wsj.com/news/articles/SB10001424052702303672404579151982566675164
What are some implications if Moelis goes public? Will they drift away from their key focus on deal execution with distractions such as additional equity shareholders they have to care about? Let me know your thoughts!
Don't believe so. Both Evercore and Lazard went public. Evercore's price has doubled since the IPO. The public ownership structure has not seemed to impact their reputation as a high-touch boutique. I would assume the situation with Moelis will be similar.
I'd be less concerned about reputation and more concerned about pay now that external shareholders will be present (perhaps they already are?). More scrutiny and pressure to hit the bottom line.
I'm just excited to read about the awkward moment when they turn to their competition to look for underwriters...
Moelis is Going Public (Originally Posted: 04/11/2014)
As many of you might know, boutique Investment Bank Moelis is going public.
However, what is unique about this deal is the voting structure:
So, how can Mr. Moelis have the voting rights of these shares but not actually own them? Most importantly, how do you think this ownership / voting structure is going to affect the deal? Why isn't he pleased with having, for example, just 51% of the voting rights?
Must say, that's an interesting stock class structure. Classes A and B are typical for tech companies (see Facebook) but this is a first for a merchant bank. I don't think it makes much of a difference between owning 51% and 97%: clearly he has the say over any future deals i.e. acquisitions. He can cash out in the future without giving up control.
Moelis is seeking to IPO similar to how public private equity partnerships (KKR, Blackstone) had earlier.
The structure reminds me a lot of Google.
Well, that bank just got a lot less attractive to work for.
Not when you're an equity patna'. I'd lateral to the next potential victim of the nyse... PWP perhaps?
Here's an interesting article from WSJ's Dealbook about the Moelis IPO structure:
Do you think Moelis and the other companies that are mentioned in the article (Alibaba, ManU, News Corp and other tech IPOs) are trying to make a statement to the activists by adopting dual classes of stock?
Maybe more companies will adopt similar ownership structures before going public in the future, but is this going to be good for the shareholders in the long term?
On the one hand, "this type of governance allows management to focus on creating long-term value without the distraction or disruption that activists or unsolicited takeover offers can cause", as it is mentioned in the article. On the other hand, in certain situations investors would have limited options, as there won't be a way to force change in such a company.
Out of curiosity, how does one value a service oriented company? Other than real estate and furniture, I wouldn't think there would be much tangible value in a service firm like this, not even intangible but valuable assets like patents or copyrights. If it loses a few key individuals then that could be catastrophic to the business.
So how are firms like this valued? I assume a ton of its value is in "good will", i.e. the good reputation of the company makes it attractive to good employees.
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