Tuesday, March 22, 2011
Interview with Kevin Covert, Covert & Co.
Story by Benjamin F. Kuo
Yesterday, Kevin Covert, formerly one of the co-founders of Montgomery & Co., announced he had formally launched Los Angeles-based Covert & Co. (www.covertandco.com). Montgomery & Co. has had a fairly significant connection to the market here, and is among the more prominent investment banks in the area. We spoke to Kevin earlier about his new firm and the move.
Talk about how you got here?
Kevin Covert: I co-founded Montgomery & Co. with Jamie Montgomery and a few others back in 1999. I was originally at Credit Suisse First Boston and Salomon Brothers (now Citigroup). In the early years at Montgomery, I was essentially the in-house M&A expert. Our original name when we launched the firm was Digital Coast Partners, and we focused on being a consulting firm, investment bank, and incubator. When the tech bubble burst, we focused on technology M&A investment banking, which was my personal expertise. In 2003, we changed our name from Digital Coast Partners to Montgomery & Co. While other partners focused more on firm-wide marketing, I was basically the “deal” guy who had worked at a large investment bank previously and brought my premium bulge bracket experience to the table. I also brought my Bay Area technology connections to the team from my Stanford network. We had a great ten years building Montgomery and I am proud of what we accomplished together. During that time, I co-headed both our Software Group and Media Group. And last but not least, I was the founder and lead guitarist of our company rock band, “Full Monty”. Our original vision was about the convergence of technology and media in Southern California and globally. We thought that was going to happen in the first Internet bubble, but it's really happening in force now.
Why a new investment bank?
Kevin Covert: There are a number of reasons why it was time for me to launch a firm on my own. A few years back at Montgomery, we spent a great deal of money expanding into the public capital markets, managing IPOs, hiring research analysts, etc. Unfortunately, the IPO market did not cooperate. When the market crash hit in 2009, the financing and M&A business dropped dramatically throughout the entire investment banking industry. At that point, I had to decide whether to stay and rebuild as the market came back, or launch another firm with my own vision. I decided to launch my own firm and leverage my execution expertise and industry relationships to take advantage of the exciting growth opportunities in the SoCal and West Coast technology markets. I have built a strong reputation over the past ten years with entrepreneurs and investors as someone they can trust to work extremely hard, manage complex transactions, strive for perfection and consistently deliver home-run outcomes. I believe there's a huge backlog of deals that has built up over the past few years and that needs to be flushed out. This will create a major wave of M&A transactions over the next several years. This cycle provided a perfect opportunity for me to do it again and launch another investment bank, but on my own this time. I'm very excited about helping companies in LA raise capital and complete successful strategic exits.
Montgomery & Co. did a good job of getting noticed--what did you guys do to raise visibility?
Kevin Covert: That was one of the things we did well. We also remained very focused on the technology space. We had a big vision initially to not just be a regional bank, but to be nationwide and even global. That's why we had a presence in the Bay Area, a presence on the East Coast, and in LA. In addition, I developed strong personal relationships with international companies and investors and completed most of our global deals over the years. With my new firm, I plan to continue my previous track record of very deep knowledge of our industry sectors--that means not just being focused on internet and media companies, but maintaining a deep understanding of subsectors such as online games, online advertising, and mobile media. That allows us to know all of the buyers and investors in our space and add value through strategic positioning of our clients with buyers and investors. Most importantly, we are focused on premium quality services. We want to emulate great companies such as Allen & Co., or Goldman Sachs, and not just be another small boutique firm. I have experienced the premium quality difference at the larger firms I worked at, and we plan to bring this premium quality to our clients.
What's your read on the market today?
Kevin Covert: It's great for VCs that are healthy, but there is lots of turmoil. However, if you are a new investor, it's a perfect time. There will be some rough patches, but everything goes in cycles. I think we're entering a period of growth, particularly in LA, where you're starting to see a huge opportunity in terms of the vision of combining media, the Internet, technology. What you first saw happening with content in the music area--where things went from non-digital to digital--is happening now with all forms of content: games, videos, newspapers, magazines, blogs, etc. There is a content shift that is happening, and LA is well positioned for that.