Thoughts on Tidal Partners
the title says it all..does wso believe Tidal to be the next Q? very interested to see what comes of this & how it'll effect the broader tech banking landscape.
Pls share thoughts
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From what I understand, Handler (who was the co-founder of CVP's tech practice) had a fallout with Pruzan and Effron; Handler had been spending more time in Miami over the last few years, and they had differences at leadership level that became untenable. Effron essentially rang the death knell with hiring of the senior BoA PA team members including Jack MacDonald. Would be very interesting to see how Tidal competes now, but Handler is a beast and he ran the Cisco and other relationships for CVP, including a lot of strategic consulting work for them. You wonder if those relationships migrate over, and if CVP PA goes on to do more traditional M&A like the rest of the firm.
1. The tech market is big enough to have multiple players who do well outside of the "3 heavy hitters".
2. Its not about what's a smart long term play- its about connections, and what your partners can bring in. The ex-BofA team were M&A and coverage bankers, you can't simply expect them to start offering strategic consulting services overnight. If their experience is in in deal-making, that's where CVP PA will operate in.
3. You don't always have to differentiate yourself by doing something different (like strategic consulting). In banking, you differentiate yourself based on connections, reputation, and efficiency with which you can execute a deal. CVP is ultimately a bank, and they compete with other banks, not with McKinsey. If you want to be hired as a banker, you want to be seen as a banker - closing deals, being on deals, etc. I rarely come across them on bake-offs; I've seen them on one M&A deal now, and its run out of NY. And their recent hires are a push towards that deal making focus. MacDonald hiring is a clear example of this intent from Effron/Pruzan.
4. If you know the weeds of tech banking, you will know that one of the causes of breakdown between Effron/Pruzan and Handler was around Handler's approach towards doing more strategic work -> M&A/deal work with tech clients. CVP wants to compete and grow fast, and unfortunately, their more deal oriented success in building the biotech practice in SF (as an example) seems to have forced this change. Only time will tell if this is going to succeed (knowing CVP, they will probably make it work).
I think the question you should be asking is why the top associates (all of them) left Centerview’s new tech leadership to join a startup - it appears to be a complete talent drain at that level, which is the lifeblood of any well oiled group and hardest level to replace. They would’ve made a lot of money more or less guaranteed on an established platform. The outlook must be very bad or they are extremely confident with the prospects of Title (both?). Presumably they acted rationally as top performers to join a strong senior team. Was told that all of the west coast tech deal flow over the past 12-18 months came from the departing partners, which is ironic because the baml partners most definitely got massive guarantees from Centerview.
(From a NY VP) The partners from baml have been unable to provide the strategic advice that clients expect from a boutique and that the remaining MD/VP layer is weak with order takers. A former menlo bofa banker, this checks out and ultimately why I left the bank to join a m&a focused bb. With few exceptions, baml was always 2nd or 3rd seat and this is not likely to change as these senior partners sunset at centerview.
The reality is that tech banking/investing is far more dispersed and varied - and you see this "weird" co-mingling across banks/tech startups/VCs- bankers frequently leave to join investor firms or tech companies (most recently- one of the co-heads of Evercore office joining a fintech along with other senior bankers); tech FP&A/Corp Dev people move to banking at both mid/senior levels (more common than non tech industry folks moving to banking); you see tech folks starting VC firms with ex-bankers. Number of mid/senior bankers are co-investors in VCs. Even Larry Sonsini (the lawyer), has a VC fund that takes equity stakes in company he/WSGR advise on. Some boutiques take equity stake in companies they advise as form of fees. I'm at an EB and some of our advisors/senior people are straight off tech/VC people who had little background in banking prior.
Its for this reason that people move around to join boutiques/one man firms/new firms - its experience and progression mostly. You might be offered equity in platform; you might be offered chance to launch an investment platform along with advisory; you might want to build close relationships with VCs (some VCs work closely with some advisors including bankers on strategic matters leading to sale of portfolio co). LionTree is a good example, but there are others too, if you dig around. And let's not forget- 2008, Q was the breakaway firm from CS; arguably Frank Q in 2008 was more prolific than Handler in 2022, but you can see the similarities. Tech has a long tradition of uprooting the incumbents, and tech banking is no different.
If you look through the investors that are backing Tidal Partners, you will get a good idea of who their backers are, and you will get a fair idea of why some of the CVPs existing team left to join Tidal, and how Tidal may want to play in this field.