As Aldo Svaldi of The Denver Post reports: it took us about 10 years to grow to 11 employees, but only one year to double to 23.
SDR Ventures, a Greenwood Village investment bank, took about 10 years to grow to 11 employees, but only one year to double to 23.
“Something magical happened after 10 years,” said Chris Bouck, who co-founded the firm with Andy Limes back in 2002. “We are starting to get recognized.”
The firm helps owners of small- and medium-sized companies arrange financing, make acquisitions or sell. And its profile is rising as the ranks of locally owned competitors shrinks.
This summer, a subsidiary of accounting giant KPMG acquired St. Charles Capital, one of the state’s best-known investment banking brands. That leaves Headwaters MB, Q Advisors and SDR as leaders among the locally owned independent brands.
Once boutique investment banks get acquired, they tend to pursue bigger and bigger deals, leaving a void for smaller firms like SDR Ventures to fill.
“They pull these banks upstream to bigger deals,” said Travis Conway, the firm’s director of investment banking.
SDR focuses on companies in manufacturing, health care, technology, distribution, professional services and consumer products, and has developed a national reputation in the pet industry.
SDR’s average deal size is about $35 million, and the companies it counts as clients have a typical value of $10 million to $30 million, Conway said.
Part of its marketing pitch is that its bankers aren’t masters of high finance, but have been in the trenches running companies.
“We weren’t deal guys; we were operators,” Conway said.
Deal activity nationally is starting to rev up again after a long hiatus following the 2008 financial crisis. SDR Ventures has seen its revenues shoot up 90 percent in the past year alone.
“The economy is not roaring. The surge is due to pent-up demand, ” said Ned Minor, a mergers and acquisition attorney at Minor & Brown in Denver.
Investors are holding billions in cash they want to deploy and banks are more willing to lend for acquisitions. That has led to higher prices, in turn luring more sellers, but not as many as expected.
Despite a decade of speculation that baby boomer business owners, those born between 1946 and 1964, would seek retirement in droves, it hasn’t really happened.
Minor said that could reflect owners, scarred by the downturn, who are more confident about the returns they can generate through a business than by investing in stock, bonds and other passive vehicles.
But aging, like gravity, can’t be avoided. Bouck expects that in the next five years, there will be a big wave of boomers exiting the business world.
“They are approaching retirement age,” he said. “They will sell or transfer. That is why we keep investing in the infrastructure.”
SDR has worked with some clients since their early days, resulting in multiple transactions.
The firm did 10 different transaction for HealthTrans going back to 2002 when the health care management firm had 18 employees. That assistance culminated in the January 2012 sale to SXC Health Solutions Corp. for $250 million cash. HealthTrans by then had grown to 263 people.
“The engine of the economy are these small businesses,” Bouck said. “And we have always had a focus on business owners.”