Alex. Brown & Sons made a name for itself by taking public the small, entrepreneurial companies that many larger Wall Street firms ignore.
Now it's set to deliver those clients to Bankers Trust New York Corp.-a banking giant with aspirations to become a major securities firm. How do those customers feel about Alex. Brown's prospective new parent?
Hopeful that it will let the firm stay true to its small-company roots.
"We used Alex. Brown because we believed they were the best firm to do our type of IPO," said Steve Dreier, chief financial officer of Bright Horizons Children's Centers, Cambridge, Mass. Alex. Brown is currently leading the company's $23 million initial public offering.
"I'm sure Bankers Trust doesn't want to weaken that reputation" he said. Mr. Dreier's company, which sets up child-care centers for corporations, had $90 million of revenue last year.
The typical Alex. Brown client is a middle-market company with $50 million to $1 billion of annual revenue. It is particularly well-known in the health care, media, and telecommunications industries and is attractive to companies that find larger institutions unreceptive to their deals.
Some large investment banks "do smaller offerings, but the reputation of Alex. Brown is that they do IPOs of our size," said Mr. Dreier.
Another Alex. Brown client, Phycor Inc., a Nashville-based operator of physician practices and clinics, said the firm contacted its executives early Monday morning to tell them about the Bankers Trust deal. John Crawford, Phycor's chief financial officer, said Alex. Brown's type of client contact and service is emblematic of how it does business and boded well for its future under Bankers Trust.
Phycor first began using Alex. Brown because "they had exceptional people working in the health care services, and as this company was blazing a very new trail, we valued the input of these outside advisers," he said.
From 1988 to 1990, Alex. Brown worked on private offerings and a subsequent $33 million IPO for Phycor. Most recently, it raised $210 million for Phycor in a stock issue that closed in early March.
A merged Alex. Brown and Bankers Trust is likely to try to leverage the investment bank's relationships with midsize firms into more business for the commercial bank. But Alex. Brown's smaller customers may not necessarily jump at that opportunity, Mr. Crawford said.
"I don't think we'd breech existing banking relationships just because of this new relationship," he said. "But there certainly wouldn't be any closed doors either."