IB in Greater Washington DC

Plenty has changed in the DC metro IB scene since the last major discussion thread about it here, so I wanted to compile newer info about some groups in the area to provide a snapshot of the landscape as of March 2020 for anyone interested.

I find this market to be pretty interesting-- big enough to support some competition, but small enough to follow broadly. IB here is certainly a small world and I find it neat to follow the major players as they move from firm to firm.

Please comment with your thoughts/corrections and additional info for the groups I list and the groups I miss. I’m sure I’ve forgotten some major groups and included some outdated or just wrong information, but hopefully this is more good than bad.

DC area groups/firms to know, in no particular order:

Baird

Real Estate (Tysons) - About five directors including Real Estate IB group head. This team was formed when Baird brought over FBR’s Head of RE IB and a couple other senior guys who’ve stuck around since then. My understanding is they’ll work on equity and M&A opportunities in office/industrial/healthcare RE. I think the Group Head was brought in with an initial focus on lodging deals, but not sure if they’re still active in that space. This Tysons office was actually opened in 2004 by a father/son team that specialized in REIT IB until leaving in 2011 and landing at BMO later that year.

Technology & Services: Government Services (Tysons) - A leading government services sector coverage team that’s been hot. Would love to hear more perspectives on this group. Jump-started in 2018 when Baird brought over Group Co-Heads from the Houlihan Lokey Government Services & Defense Technology practice in Mclean. The pair had a good run and spent something like 35 years collectively at HL; one of them was a founding member of HL’s ADG group in the mid ‘90s. Somewhat of a surprise departure from HL to Baird that they said was in large part about finding the right culture (https://www.bizjournals.com/washington/news/2018/…). Buy-side advisor for Leidos’ $1.65B acquisition of Dynetics in December 2019. Sell-side advisor for Incentive Technology Group $255MM sale to ICF in January 2020. Sell side advisor to AASKI sale in March 2020.

Houlihan Lokey

Industrials: Aerospace, Defense, & Government Services (Tysons) - Good ADG group with about 30 bankers split across DC, London, and LA (huge for this industry focus). Responded to loss of Song/Stack by acquiring Bluestone Capital Partners (ADG boutique) at the end of 2017 which included John Allen (interesting background bouncing around the area: co-owner of Windsor Group prior to its 2005 acquisition by BB&T, President of Quarterdeck Investment Partners until Jefferies bought into it in 2001), who left after a short time to focus on Bluestone Investment Partners, a ADG private equity firm he co-founded. HL Government Technology and Services practice completed/announced 9 transactions in 2019 at ~$1.4B deal value.

KippsDeSanto (acquired by Capital One September 2019)

Growth-oriented A/D, Government Services and Tech Boutique (Tysons) - Boutique exclusively focused on ADG founded in 2007 by a bunch of guys that jumped from HL ADG, up to about 30 bankers now. Will be interesting to see how Capital One tries to grow them. Will continue to operate under KippsDeSanto name in a separate office from CapOne campus 10 minutes down the road. Tendency to work with younger/smaller, tech-focused ADG clients. Used to have a reputation for being a little sweaty, but I’m not sure if that’s still accurate.

Raymond James

Diversified Industrials: Defense & Government Services (Reston) - Established in 2015 by last remaining bankers of shrinking ADG team at BB&T Capital Markets Windsor Group, which had once been the leader in Gov Services M&A until mid 2000s, until BB&T acquisition and decision to focus on commercial lending following the financial crisis drove top dealmakers out over time. The fragmentation of Windsor Group led to creation of Bluestone and allowed HL to step up. Now focus on C4ISR and Government IT markets at RJ. Sell-side advisor to PIXIA in January 2020 $250MM sale to Cubic. Group head, who was also longtime group head at Windsor, left in 2018 to head SunTrust Robinson Humphrey ADG group, which I’ve heard next to nothing about. Smaller office with no more than 8 or 9 bankers.

Jefferies

Industrials: Aviation, Aerospace & Defense (DC) - Jefferies’ ADG coverage is split between New York, DC, and Charlotte I believe, with about 20 bankers altogether, so the DC office is pretty small. Not sure how much direction they take from NY HQ. Dropped the Quarterdeck name a while ago. Don’t know much more about them except for that they used to be pretty hot-- please comment with more info if you’ve got any. Jefferies was the sole sell-side advisor for Dynetics in their big sale to Leidos, but I'm not sure whether it was the DC office taking the lead on that. I believe the ADG M&A group head sits in the Charlotte office (joined in 2018 from WF).

Stifel

Diversified Industries: Aerospace, Defense, and Government Services (Bethesda) - Brought in a couple of new managing directors in 2019 who had been working together for a long time, including a new group head after the old one, who had founded Stifel’s ADG group in ‘95, left to go to Outcome Capital (curious about the rationale behind this move and how it affects deal flow for Stifel). The two new MDs have solid ADG resumes and are coming from Teneo / Twelve Rolling Capital, with a history together at Jefferies Quarterdeck and Lazard’s ADG group. Please share your outlook on the group and any insight into their dealflow.

Outcome Capital

Growth-oriented Life Sciences and Technology Boutique (Reston) - Small offices in Reston, New York, and Boston. Interesting for its different industry focus, but trying to build out their ADG presence now. Been around since the late ‘90s so they must be doing something right.

Clearsight Advisors

Growth-oriented Business Services and Technology Merchant Bank (Tysons) - Business Services, Data and Technology focused merchant bank founded in 2011 by some former Business Services coverage guys at HLHZ, which has since grown to about 30 employees. Opened a small Dallas office in 2015 which I don’t know anything about, not sure whether it’s a real office or a glorified home office for an MD that wanted to move down there. Heard they were opening an office in Nashville in 2018 as well but couldn’t find much about it. Press release indicates that their first half of 2019 was their best ever, with 10 transactions closed and “record-high revenue”; based on the tombstones I could find, things seemed to cool down for the second half of 2019. Seems like a pretty fun place from the outside. All the junior people are Penn/UVA/W&M and former student-athletes. They make a big deal about internal promotions. Would love to learn more about this firm. Curious what kind of comp they’re pulling down.

The McLean Group

Strategic advisory for a variety of industries but led by ADG (McLean) - Has ADG, consumer & digital media, franchising, healthcare, specialty online retail, technology and telecommunications, and water practices. Noticed they advise on quite a few gym franchise M&A deals. Been around since 1997 and grown into one of the biggest IBs HQ’d in this area. They have a bunch of tiny offices in places like Charlotte, Cincinnati, a couple in Texas, other small cities. Founder and Chairman Emeritus wrote a few books and lives in Cabo now, so +1 for that.

Aronson Capital Partners

ADG M&A and financial advisory (Rockville) - Been around for a while (since 1999), but haven’t seen a whole lot of IB activity from them in 2019. I think the IB team is really lean, so they can do well with only a few decent sized deals per year. The Aronson LLC parent company does a lot of Assurance/Tax and Consulting work and I’m not sure how heavily IB is prioritized internally.

District Capital Partners

Focus on M&A for buyout and growth equity investor clients (Downtown DC) - Emphasizes long-term relationships and outsourced corporate dev work, mostly with technology companies; e.g. they’ve been working with Diligent Corporation (secure corporate governance / compliance via the cloud) around here for a while: DCP did some advisory and transaction support for Diligent when Insight Venture Partners bought them for $624MM although Jefferies ran the sell-side process. DCP did the same thing for Diligent when Clearlake made minority investment in them in 2018-- MS was lead advisor on that deal. DCP was sell-side advisor for a Clearlake portco electronic medical SaaS deal sometime in 2019. Founded in 2013 by education software Corp Dev / former Salomon Smith Barney software banker who worked on some pretty big deals back in the day. They have about 20 bankers and some of the senior people have decent resumes. All of the junior people are lateral hires (anyone know whether they bother with any campus recruiting or intern programs?). It’s not that old of a firm so I’m curious about their approach to internal promotions and the exit opps of their junior people given the work they do with PE clients.

Harris Williams

Aerospace, Defense & Government Services (Downtown DC) Couple of senior bankers in the ADG group that’s split between DC and Richmond. DC office was opened in 2016. Advised PAE (backed by Platinum Equity) in big merger with Gores Holdings III. Advised an aviation company on majority recap Q1 2020. Seems like all the directors in HW’s ADG group are ex-military (HW in general seems to like recruiting veterans).

Other groups of note

• Rothschild (DC) - Metals and mining. Fairly small office. Wish I knew more but I don’t.
• DC Advisory (DC) - Chairman is based in DC. Opened a bigger office in DC in 2018 consolidating previous offices in Baltimore, Tysons, and Reston. Practices here include Technology & Software, Education, Environment/Health/Safety, Infrastructure Software, ADG, Enterprise SaaS, Transportation,
• Evergreen Advisors (Mclean, VA and Columbia, MD) - 30+ person firm that does a lot of corporate advisory work (strategic shareholder initiatives, operational advice, etc.)
• FOCUS Investment Banking (Tysons, VA) - ADG, manufacturing, auto, supply chain, telecom industries; HQ’d in DC area with offices in Atlanta and LA as well
• Seale & Associates (Arlington, VA) - Does some interesting cross-border work especially in Latin America. Has a presence in Miami, Mexico City, and Monterrey.
• Olsen Palmer (DC) - FIG M&A. Actually has really impressive deal volume, mostly around $30-40MM transaction value. Had one deal in December 2019 valued at $78.7MM. 13 tombstones on their website for 2019. Not bad for such a small team.
• Taylor Companies (DC) - Historically a family company that keeps a low profile, advertises confidentiality in divestiture process, specializes in acquisitions of off-market targets
• Ziegler (Bethesda, MD) - Healthcare corporate finance. Did some merchant banking work too I believe.
• Greenberg Advisors (Rockville, MD) - Business Process Management and Healthcare IT sector focus.
• Capstone Headwaters (DC?) - Has at least a couple of directors in DC. The one that I’d heard of focused on middle market insurance company advisory.
• BroadOak Capital Partners (Bethesda) - Advisors and investors with a life sciences focus. Real small group split between Maryland and SF and will do a few deals a year.
• England & Company (Bethesda) - Office has a Healthcare guy, and a couple energy/infrastructure industrial tech guys. Small firm with a few people in NYC and a CEO in Houston as well.