Tuesday, November 10, 2009 11:40 AM
Macquarie continues to bleed Tristone veterans
Andrew Willis
Veterans of Tristone Capital continue to walk away from their new employer, Macquarie Group, with sales veteran Warren Robinson leaving this week for Haywood Securities.
Macquarie bought Calgary-based energy boutique Tristone back in May for $116-million in cash and shares, and has struggled ever since to retain professionals from the 170-person firm.
Most of Tristone’s investment bankers in London left for FirstEnergy Capital, an employee-owned Calgary-based dealer that recently hung out its shingle in the U.K. Tristone’s former Houston office has also been hard hit with defections. While any brokerage house takeover produces turnover, Macquarie’s acquisition has been plagued by an extremely high attrition rate.
Mr. Robinson is a respected player in the equity sales community. The veteran of Newcrest Capital is joining a mid-tier, employee-owned dealer in Haywood that’s got the same sort of corporate culture that marked his former firm, and quitting a global investment bank.
Like most moves on the Street, defections from Macquaire can be traced in large part to money.
The Tristone acquisition was structured with a $57-million of cash, paid up front. The remainder of the purchase - $59-million - will be paid in shares that vests over five years - and five years is forever to investment bankers.
The $59-million of equity is also a variable payment, with the final amount to be set based on performance turned in by the Tristone unit in the two years that follow the Macquarie takeover. Here’s where those Tristone shareholder get into something of a vicious circle.
The more veterans of Tristone depart, the weaker performance from these team will likely be over two years, and the less that equity stake is likely to be worth. With each departure from Macquarie, there is less downside for Tristone professionals considering jumping to a rival dealer.
For Macquarie, failing to keep professionals acquired in an acquisition must be chilling, as the Sydney-based investment bank just dropped $93-million on Blackmont Capital, a retail brokerage house, where the only real asset is 130 stockbrokers who walk out of the office at the end of each day.
Macquarie also spent $147-million to buy boutique domestic dealer Orion Financial in 2007. This summer, Orion's top mining banker, Doug Bell, left for Toronto-based GMP Securities.
