February 17, 1997

Fledgling M&A Firm Croft & Bender Doing Deals

Atlanta Business Chronicle

Atlanta Business Chronicle - February 14, 1997 by Charles Davidson
A small investment banking firm formed last August by Robinson-Humphrey Co. veterans Edward Croft III and Ted Bender has already worked as an adviser on seven mergers and hired three associates.

Croft spent 25 years at Robinson-Humphrey. His partner Bender was at Robinson-Humphrey for 20 years.

After leaving Robinson-Humphrey in April 1996, Croft started a firm with his father, Edward Croft Jr. Late last year, the younger Croft and Bender decided to join forces.

The new firm, Croft & Bender LLC, in October moved into office space on Northside Parkway and has hired three associates: Thad Jones, a former corporate finance analyst at Robinson-Humphrey; Ronnie Goldman, now at Harvard Business School and also a former Robinson-Humphrey corporate finance analyst; and Brock Matthias, who helped handle acquisitions for First Physician Care, a physician practice management group. Before that he was a corporate finance analyst at the Minneapolis-based investment bank Dain Bosworth.

Among its activities, Croft & Bender advises on mergers and acquisitions for middle-market companies and arranges private placements of equity and mezzanine capital of $3 million to $10 million, Croft said. In some deals, the firm takes equity positions as a portion of its fees. Croft & Bender also engages in financial advisory work for companies.

WHERE ARE THE NUMBERS? Some local bankers are wondering when the Atlanta-based banking company Fidelity National Corp. will release fourth-quarter results.

While companies such as NationsBank Corp., with $227 billion in assets, reported earnings as soon as a couple of weeks after the quarter closed, $600 million Fidelity still had not reported as of Feb. 11.

Fidelity lost $1.6 million in the third quarter last year, mainly because of problems in its credit card portfolio, the company said. Credit cards account for an unusually high segment -- one-third -- of Fidelity's loan portfolio. In November, the Office of the Comptroller of the Currency ordered Fidelity to raise additional capital. The company said it was adequately capitalized according to OCC regulations at the end of September, but needed more because of rapid growth.

Some Atlanta bankers and banking observers said Fidelity's problems are probably not over. For the first nine months of 1996, Fidelity reported that its net income slipped badly, to $4,000, from $3.4 million in the same period of 1995. Fidelity Chairman James Miller was not available for comment by press time.

GOLDMAN WAS HERE. Goldman, Sachs & Co., which plans to open an Atlanta office this summer, recently held a lunch at the Ritz-Carlton Buckhead for clients.

At the lunch hosted by Bert Rayle, the Atlanta native who will head the local office, Goldman brought in Abby Cohen, one of its heaviest hitters, to speak. Cohen is co-chairman of Goldman's investment committee.

In 1991, she predicted a prolonged period of steady economic growth, low inflation and a marathon bull market. She was right on all counts, and remains optimistic about the stock market, according to published accounts. Cohen believes continued low inflation and strong economic growth bode well for stocks.

Goldman is known mainly for its investment banking prowess, though its Atlanta operation will house 15 to 20 investment professionals who will focus on money management and brokerage services for wealthy individuals and families, not investment banking. In 1996, Goldman acted as an adviser on completed mergers and acquisitions totaling $146.5 billion, ranking second in dollar volume to Morgan Stanley, according to Securities Data Co.

HOULIHAN LOKEY AMONG FEW. One of the few investment banks based outside the South with Atlanta operations is Houlihan Lokey Howard & Zukin of Los Angeles.

Houlihan Lokey, which ranked 19th among M&A advisers last year, opened an office here in October. The firm is probably best known for its work determining the value of professional sports franchises.

Headed by Citizens & Southern Corp. alumnus and Bush administration treasury official Michael Jacobs, the firm's local office is concentrating on deals involving middle-market companies -- with annual revenue from $50 million to $500 million -- mainly in the textile and apparel industries.

Jacobs said he is in the midst of the sale of a $300 million-revenue company.

Houlihan Lokey has five people in Atlanta now and would like to add more over time, Jacobs said.