DA Davidson is beefing up its tech banking practice as it welcomes sector specialists from recently acquired investment bank Marlin & Associates.
Its expansion plans include bringing on new team members focused on digital healthcare to support an existing partner on the tech team, as well as bankers focused on internet and digital media. The bank will also look to expand in Europe and add a partner in London to specifically focus on fintech, Joe Morgan, co-head of technology investment banking at DA Davidson, told PE Hub.
“We have a good number of bankers focused on software, but the software market is so large and so fragmented, I feel like there’s always more need there,” Morgan said.
Speaking to its merger with Marlin, Morgan said DA Davidson’s rationale for acquiring the bank was to strengthen its domain expertise in fintech and data and analytics.
“Marlin’s team has been sector experts in that area for 20 years,” he said. “We did not have expertise there; we were competing, but we were not winning, and so part of the rationale is to bolster and improve that.”
Michael Maxworthy, a new co-head of tech investment banking at DA Davidson, who joined from Marlin & Associates, said his team at Marlin has been broadening its fintech focus for a while now, covering sub-sectors like wealth tech, bank tech and InsurTech.
The team is already busy with new advisory opportunities that are coming through both DA Davidson’s and Marlin’s network channels.
Overall, the bank plans to differentiate itself by leveraging its full-service equity markets capabilities. DA Davidson, which has been an underwriter on IPOs for high-valued companies like Snowflake, UI Path, and Coursera, plans to bring its expertise to other levels.
“Being able to take those relationships and that learned knowledge from these newly minted public companies and bring it down to the lower middle market, we think is very differentiated versus more traditional just M&A boutique firms,” Morgan said.
The longer-term strategy for the bank will be to offer an alternative to private equity firms, he explained.
“It used to be you would either sell to the next layer of private equity as you step up the ladder or find a strategic exit for your asset,” Morgan said.
“We would like to think that we’re going to get to a point where we can offer a third alternative, which is the capital markets alternative and an IPO earlier than a Morgan Stanley or Goldman Sachs would take you public,” he said.
The combined tech team will now encompass sector specialists in eight technology markets: application software, infrastructure software, vertical software, financial technology, Internet, digital media, tech-enabled services, data and analytics, and digital infrastructure.
The bank will continue focusing on advising companies in the lower end of the mid-market with enterprise values $50 million to $250 million.