SAN FRANCISCO - The Nasdaq is down 34% this year, tech merger and acquisition activity is off, and ethics probes abound - all bad developments if you work at a technology-oriented underwriting boutique that is shutting down, right?
Well, not exactly.
Investment banks that court business similar to Robertson Stephens Inc.'s niche say the San Francisco firm's liquidation has been good for them. They are making key hires even though it seems the business is still far from making a turnaround.
Units of U.S. Bancorp, Wells Fargo & Co., Bank of America Corp., and Merrill Lynch & Co. all have hired away senior investment banking, research, and other personnel from Robertson Stephens since FleetBoston Financial Corp. said last month that it would close the unit after failing to find a buyer for it or negotiate a management buyout.
The hiring has generally been done in bits and pieces, not in clumps. One exception is Merrill Lynch & Co., which has hired Robertson's seven-person venture services team. It is headed by former Robertson managing director Anthony Grosso, who confirmed that the group starts work Monday.
Most say they are taking advantage of the slowdown in business to bolster key areas to be prepared when recovery comes. Many of the firms are taking their cues from the experience of Robbie, which doubled in size during the boom of the 1990s and continued to hire even after the bubble burst.
About 100 employees remain at Robbie's 555 California St. headquarters, where 700 were laid off last month. Those who remain are winding down the operation, FleetBoston spokesman Charles Salmans said.
In addition, Fleet is hiring six to 10 Robertson brokers for its Quick & Reilly brokerage operation, and a "small handful - probably not more than six" of its institutional sales and traders for its East Coast capital markets businesses, Mr. Salmans said.
Many remaining boutique firms want to distinguish themselves as having a fate different from that of the so-called Harms group - consisting of Hambrecht & Quist, Alex. Brown & Sons, Robertson Stephens, and Montgomery Securities. Each of the four has either become part of broader investment banking platforms or vanished entirely after being bought by commercial banks.
"Most once-great growth companies have lost their focus or worse yet, been closed down," Andrew Duff, the chief executive of U.S. Bancorp Piper Jaffray, said Tuesday in the keynote speech at Piper Jaffray's technology conference in Boston. "Piper Jaffray will be a highly focused securities and investment bank."
Joseph Jolson, the founder and chief executive of JMP Securities, a San Francisco-based start-up, said, "It's unfortunate that a company with a great history closes so abruptly," but "we've been waiting for this kind of consolidation so we could hire some people," including partners.
Wells Fargo Securities, whose parent company reportedly considered an offer to buy Robbie Stephens, brought on medical technology research analyst Wade King in the last week, the type of hire it had eyed since completing a business plan last year.
But despite Wells' efforts to publicize that it is recruiting, competition to hire the best of the Robbie crop has been fierce, said Wells Fargo Securities co-chief executive Michael Hernandez. "What we generally find is that people we like that are really excellent, other people like them too," he said.
Aside from the hires for its new venture services group, Merrill has also hired some Robertson Stephens staff for its private clients services group.
Manny Friedman, the chairman and a co-chief executive of Friedman, Billings, Ramsey & Co., said in an interview Thursday that investment bankers and sales and trading personnel will start a Friedman Billings Ramsey office in San Francisco. The Arlington, Va., firm, whose six industry specialties include technology, is selecting a site for the office and expects it to open for business in the next 30 days with five or six employees, most of them from Robertson Stephens.
Mr. Friedman said his firm was also in discussions with former Robbie staffers to work in its New York office, but San Francisco is the scene for most of these investment banks at the moment. Payroll cutting and the sale of the city's formerly independent boutique firms have made San Francisco "one of the biggest vacuums" for investment banks, Mr. Friedman said. "This is simply an opportunistic move. We had talked about it before, because people were getting laid off. Now, it's become imperative."
The fate of Robbie Stephens had been a matter of speculation for much of the past year, and many rival investment banks had gotten resumes well in advance of the July 12 announcement of Robertson Stephens' shutdown. Piper Jaffray this month hired Christopher McCabe, a banker who specialized in the semicondcutor field at Robbie. Two of his colleagues, a banker and a research analyst with the same specialty as Mr. McCabe, had defected to Piper Jaffray earlier in the year.
