David M. Silver is the Head of Baird’s European Investment Banking team and a founding member of Baird’s M&A effort in Europe. He feels that M&A Market dynamics are extremely positive going forward, as large well-funded corporates look for growth through acquisitions and private equity firms search for high quality deals to deploy committed capital.
Leaders League. What is Baird’s primary focus and how is it reflected in its current strategy?
David Silver. One of Baird’s key objectives is to be considered globally as the no. 1 mid-market advisor in all the sectors that we serve. We are known for our work in the Industrials sector.
Baird focuses on global sector knowledge, regardless of client location. How the bank can add value to a transaction is the first question on the checklist, whereas client location is typically the third or fourth. We ensure that we draw from our global team, using the best combination of sector insight, buyer access (for our sell-side deals) and raw M&A and debt advisory talent on each project.
To support its objectives, the banks has its headquarters in the industrial heartland of the US in the mid-west, in London and Frankfurt, and in China.
Leaders League. Jan 2015 – May 2016 has proved to be a record period for Baird with 16 deals in the Industrials sector alone. What were the key drivers behind this remarkable achievement?
D.S. Baird has always been a very active player in the mid-market M&A space. The reasons for this strong activity are threefold. First is global reach. The bank has one global team with every member of it contributing to the same profit and loss account.
Second is deep sector knowledge. Baird has individual specialist bankers covering sub-sectors within a larger industry group. For example, within the industrials sector one banker specializes in filtration, while another covers pumps and valves. This is a significant advantage over other banks where two bankers cover the entire industrials sector as a whole.
Additionally, the bank does not pursue deals in sectors where it lacks strong insights. Being focused gives Baird the ability to compete with the largest advisors within its area of expertise, as they may not have the same strength of sector knowledge as Baird.
Third and last is the focus on providing the best possible advice – an old fashioned concept, but a very important consideration in an advisory business.
Leaders League. How do you envisage the European M&A market to unfold over the next 12 months in general and what are your strategies to capitalize on the opportunities?
D.S. The M&A Market dynamics are extremely positive going forward. On the one hand, corporates are well funded with large cash positions on their balance sheet in an environment where economic growth is relatively muted. This makes M&A an important part of the growth plan for corporates. On the other hand, many high quality private equity funds have raised money that needs to be invested, but there aren’t enough good businesses for them to invest in.
A major plus for Baird is that investors like high quality industrial businesses. This is because, by their very nature, industrial businesses tend to be global. Another strength for the bank is the presence of a dedicated Financial Sponsors Group which makes it well positioned to capitalize on deals owned by private equity players.
Leaders League. Does the addition of new senior bankers to the European M&A team in the Industrials, Consumer and Healthcare space imply diversification away from industrials or simply expansion into new sectors?
D.S. Baird has had a strong industrials team since the time of its inception in Europe. The bank also has a strong reputation in tech and services, as well as consumer and healthcare. Last year, the European team made a number of senior talent additions to further strengthen its global sector coverage.
Baird brought on board Terry Huffine and Vincenzo di Nicola to further develop and lead the European coverage in the Consumer and Healthcare sectors, respectively.
In addition, Thomas Fetzer – a veteran industrials banker – was hired to lead the German office, while Julien Darmon, also an expert in industrials and a member of the Baird team earlier in his career, joined the London office in a bid to further strengthen and expand the core industrials team.
Leaders League. Do you have any future plans to open offices in any other major European Countries, especially France, which is the third biggest M&A market in Europe with good level of deals in the Industrials sector?
D.S. In terms of fee pool perspective, France is clearly very attractive. Baird has had operations in France in the past and, if the right team came along, perhaps this possibility could be looked at again. However, this is not an immediate focus.
Combination of global reach and deep sector knowledge means that for Baird it is less about where it has people on the ground and more about finding the opportunities to which the bank can add real value.
France is interesting because it is probably the one country in Europe where you are at a disadvantage by not having local personnel, but this is changing with time. The same used to be said about doing business in Italy, but that is no longer the case.
Affan Bin Mahmood