Thomas Weisel's Westwind Acquisition Builds Bridges To Canada

Talk about out-of-the-blue.

I’m not amazed that Westwind Partners thought it would be a good idea to sell (or is it merge?), what I’m amazed at is how tight they kept it. Not a word leaked. Not a hint. Well done on all fronts. A good partner and a good price, with $45 million in cash up front.

Thomas Weisel is one of those rare U.S. birds: a publicly-traded independent investment bank (NASDAQ: TWPG). At $146.7 million, the purchase price is just shy of the $147 million paid for Orion Securities by Macquarie (see post “Nice multiple for Orion; very nice“, September 26-07). My guess is that the two book multiples as quite close, although one can never be sure.

Thomas Weisel kicked some Canadian tires in the early part of 2000, doing a bit of due diligence at Yorkton Securities, for example. Or at least that’s what Yorkton’s then-CEO claimed at the time. But Weisel went through its own ownership odyssey before going out on it own, once again, with an IPO last year.

I must admit that the financial success at Westwind had been not as well publicized as other private dealers: 2007 revenues of $85-90 million, profit of, well, it’s hard to tell as it can’t be as simple as 25.7 million Thomas Weisel shares x $0.20 per share. A private Westwind will earn more than $5 million of profit on $85 million of revenue.

In the case of Canadian issuers, Westwind’s clients should now get better access to U.S.-based institutional investors. Plus the AIM. And U.S. mid-market oil and gas firms will now be well-introduced in Calgary. Weisel was historically well-known for its technology and biotech practices, but obviously the attraction of a busy resource platform was compelling.

It will be interesting to see how other independent firms react to the news, as their own business plans are affected by the Orion and Westwind deals. Cormark’s IPO wheels will likely now start to turn again. And over at GMP, more pressure perhaps to see cross-selling benefits from their Edgestone acquisition. CI Financial had better get their growth plan rolling, assuming Dundee wasn’t their only strategy.

A hearty congratulatory slap on the back for Ross (certainly one of Canada’s best institutional salesmen) and Earle McMaster, John Grandy, Alex Wylie, Alec Rowlands and Amy Freedman. Very hearty. You guys have worked very hard and certainly deserved the win.