Monday, April 5, 2004

Interview: James Montgomery, Montgomery & Co

I recently had the chance to attend Montgomery & Co's annual technology conference, which was held a couple of weeks ago, and was interested to see the number of up and coming companies who are either looking for venture rounds, eyeing an IPO, or looking for investors. I caught up with Montgomery's CEO and founder, Jamie Montgomery to get a flavor for what the investment banking industry is looking at nowadays in tech.

BK: What has Montgomery been up to lately, and for those not familiar with what you do, what's Montgomery's business?

JM: Montgomery & Co LLC provides investment banking services to growth companies. We have offices in Santa Monica, San Francisco, San Diego and Seattle. We focus on the media, communications, information technology and healthcare sectors. We are evolving into a full service investment bank which will fill market niche that Robertson Stephens, H&Q and others played.

BK: You recent held a conference called "Tech is Back"--is technology really back, and why would you say so?

JM: We held our annual Technology Conference on March 15-16 in Santa Monica. Our theme - which we selected in November 2003 - was "Tech is Back". Between November and March, Tech came roaring back with November now appearing to be the inflection point. By the time the Montgomery Technology Conference came around the market recovery looked overdone. A couple of weeks before the conference, Forbes put "Tech is Back" on their cover. The next week Nasdaq dropped 5%. In November we felt comfortable calling for a Tech recovery as IT spending would increase in 2004 and I believe the outlook for the rest of the year is fairly positive. Next year we will do away with the theme and just refer to it as the Montgomery Technology Conference.

BK: Do you think the public markets are finally open for IPOs, or are we still primarily being driven by M&A?

JM: The public markets are open for both IPO's and Secondaries. The quality of the IPO's is key as the institutional investors have a good appetite for growth stocks. The largest number of exits remains through M&A. We project that about 90% of the liquidity events will be via M&A however the market is open for IPO's.

BK: Where are you seeing the most activity for your firm?

JM: We are active in growth financings for private companies, the last round of financing prior to an IPO. We are also active in industry sectors that are consolidating including enterprise software, security, online services, semiconductors and communications equipment. The outsourced business services segement is very active. Of course, our biotechnology and specialty pharma business is also booming.

BK: Are there any industries you say as particularly promising right now?

JM: We are excited about prospects for semiconductor companies for the wireless industry. San Diego is a very active market for us and we recently opened an office there.

BK: Thanks!