The Changing Scene: PWC Securities’ New Top Gun

PricewaterhouseCoopers named Michael Hammond, a veteran health care investment banker, in late 1999 to head up the company’s investment banking operations. As president and CEO of PricewaterhouseCoopers Securities LLC, he will continue to work on health care deals while shouldering administrative responsibility for the institution’s banking activities in telecommunications, technology, and other areas. In November, Hammond talked with Mergers & Acquisitions about some of the challenges facing m&a professionals in health care. Hammond started by acknowledging that the sector has been battered by reductions in Medicare funding, the impact of the balanced budget bill of 1997, and tighter financing. “The impact of the budget bill was devastating, especially to the acute-care and other provider components,” he said. He explained that as a result of these limits, along with what he termed a 40% decline in Medicare funding in some areas, the profitability of clients and potential clients has declined. In turn, this has reduced capital available to support deals. Hammond, 49, has spent 20 years advising companies on m&a and other types of strategic alliances, such as joint ventures, joint partnership models, and other restructurings. His client list includes a wide variety of health care companies, including large, not-for-profit and public health care systems, physician organizations, managed care companies, and related health care providers. He pointed out that like many other industries, health care is cyclical. In the wake of the large number of deals done in the early and mid-1990s, many segments of the industry are busy integrating new business units. He added that while the deal flow has slowed, it isn’t dead. Ratio-nalizations and the shedding of assets have resulted in a steady stream of assignments for his team. Hammond remains a principal at Shattuck Hammond Partners, which is the health care-focused division of PricewaterhouseCoopers Securities, a wholly owned investment banking and financial advisory unit of Pricewater-houseCoopers. Price Waterhouse acquired Shattuck Hammond in June 1998, a month before the megamerger that created PricewaterhouseCoopers. The securities unit of the firm provides investment banking and financial advisory services, including m&a counseling. It also raises debt and equity capital in the private markets and underwrites tax-exempt securities. Prior to the formation of Shattuck Hammond, Hammond held senior management roles in health care banking at Salomon Brothers and at Morgan Stanley. Hammond noted that some ailing parts of the health care business, such as the assisted-living sector, are themselves victims of trends such as the overall downturn in the commercial real estate market. He pointed to pharmaceutical and information technology companies as two bright spots in current m&a deal activity. He cited the activity by a number of health care companies that are positioning themselves to provide an information technology solution to medical information processing as a sector in which deals are in the works. Pointing to the fact that an estimated 30% of the health care dollar is being spent moving paper from place to place, Hammond said that the effort to integrate and automate the industry’s paper trail is attracting investors and offers m&a opportunities. Another promising area within the health care information technology sphere, Hammond said, is the move toward the standardization of physician treatment protocols. “There is lot of raw data about how doctors manage different conditions, but the trick will be to reformat it in useful ways.” At PricewaterhouseCoopers, the m&a product line was second in the world in the number of deals completed, according to Securities Data Co. As of November 1999, the firm had served as adviser in 341 deals with a total value of $33.2 billion. Goldman, Sachs Group has reorganized the top ranks of its m&a lineup. It named two new U.S. co-heads in New York and two managers to handle European deals. Michael Carr, the former Salomon Brothers m&a banker who joined Goldman last year, and David Baum will co-head the firm’s U.S. activities. Gordon Dyal, who joined the company from Morgan Stanley Dean Witter last year, and veteran Goldman banker, Yoel Zaoui, will be co-heads of the European m&a business. Another Goldman m&a banker, George B. Foussianes, was promoted to managing director. Conoco Inc. – Gary W. Edwards was named senior EVP of corporate strategy and development. Edwards had been EVP of refining, marketing, and transportation. Service Appointments Allen Matkins Leck Gamble & Mallory – Gregory Preston joined this law firm and will serve as chair of corporate practice in the firm’s Orange County, Calif., office. Banc Boston Robertson Stephens -Steven Tishman has joined the company as managing director and head of the firm’s growth banking group. Brown, Gibbons, Lang – Andrew Petryk and Thomas West have been promoted to SVP at this investment bank serving middle-market companies. Also, Jonathan Alt and James Miller were promoted to VP and Ethan Baron and Nir Gabriely were made senior associates. Castle Harlan – Jonathan I. Mark has been appointed senior managing director. He had been a director of the private equity group at Bain & Co., a management consulting firm. Deutsche Bank Alex. Brown – Managing director Peter Breck has assumed the new position of head of investment banking for the West Coast. Firstar Bank – Jay Williams was named to the position of head of middle-market lending for Wisconsin, Minnesota, and Chicago. Gibson, Dunn & Crutcher LLP – Brian Lane, a principal architect of many of the SEC’s regulatory developments, notably in m&a, cross-border transactions, and tender offers, has joined this law firm as partner, where he will represent U.S. and foreign clients in m&a deals and debt and equity offerings. Jordan Edmiston Group – Claudia Flowers has joined the firm as associate managing director and will focus in the information sector on traditional and Internet companies. Josephthal & Co. – John O’Brien is joining the company as director of investment banking. He had been at Bluestone Capital Partners LP, where he was managing director of high technology. Legg Mason Wood Walker Inc. – B. Andrew Schmucker was named head of the Philadelphia corporate finance office. He is a managing director of the firm and head of the industrial services banking group. Also, J. Gregory Driscoll joined the corporate finance group as a managing director in the distribution industry group, with a special focus on the petroleum sector. Merrill Lynch & Co. – Brian Hehir has been named a vice chairman of investment banking. New River Capital Partners – Thomas W. Hawkins was named partner at the Fort Lauderdale, Fla.-based private equity fund. Pennsylvania Merchant Group – Charles P. O’Brien has joined the firm as SVP of business development. Prudential Securities Inc. – Stephanie Young has been appointed managing director of the firm’s media, entertainment, and communications group. Tejas Securities Group Inc. – Michael L. McAllister has joined the firm as managing director of the corporate finance department. Thayer Capital Partners – Rick Rickertsen was named COO of this private equity investment firm. Thoma Cressey Equity Partners – Orlando Bravo was promoted to principal of this private equity investment firm. Tucker Anthony Cleary Gull – Jeffrey M. Bistrong joined the firm as a principal in its technology investment banking practice. He had been a principal in m&a at BancBoston Robertson Stephens. Veronis, Suhler & Associates – Kenneth B. Marlin has been named managing director of the bank’s business information services segment. He will divide his time between investment banking activities and private equity investments with VS&A Communica-tions Partners III, the firm’s $1 billion private equity fund, which focuses on investments in the information, communications, and media industries. Warburg Dillon Read – Chris Ryan has been appointed as the firms as global head of banking products W.R. Hambrecht & Co. – Lawyer and investment banker Bruce Mann joined the firm as general counsel. He will also continue to be a partner at the law firm Morrison & Foerster. Corporate Appointments Access Media International – Eric Shuster has been named managing director and EVP of corporate development. Advanced Communications Systems – Kenneth D. Regan was promoted to director of strategic acquisitions. ANDA Networks – Robert Simkavitz was named VP of business development. Andrea Electronics – Patrick D. Pilch has been appointed SVP of strategy at this audio equipment manufacturing company. Apartment Investment & Management – Lance J. Graber, 38, has joined the REIT’s senior management team as EVP-acquisitions. AutoNation – Thomas Butler was appointed SVP of corporate development. He replaced Thomas W. Hawkins, who joined New River Capital Partners (see previous page). Budd Co. – Marion Helmes joined the vehicle components producer as director of corporate development. She transferred from Budd’s parent company, Thyssen Krupp AG in Dusseldorf, Germany, where she was senior project manager in the company’s m&a department. ChemConnect – Michael K. Eckstut has been appointed SVP of business development. Cox Enterprises – Andrew Drake has been named director of new media business development at this diversified media company. Duke Energy – Stephen Schaefer has been named VP of acquisitions and divestitures at Duke Energy North America, a subsidiary of Duke Energy. Epimmune Inc. – This biotechnology company named Stephen F. Keane VP of corporate development. Fortune Brands – Thomas S. Flocco was elected as SVP of strategy and corporate development. Headhunter.net – The online recruiting service appointed Craig Stamm as VP of business development, in which capacity he will be responsible for m&a, JVs, and strategic alliances. ImaginOn – Sue Ann von Kaeppler was named VP of business development at this producer of CD-ROM and Internet software. Intermost Corp. – Mark P. Williamson has been appointed VP of business development. InterMune Pharmaceuticals – Timothy P. Lynch has joined the company’s management team as CFO and VP of business development. Liberty Digital – Craig L. Enenstein was appointed VP of business development and strategy. Lucent Technologies – Michael C. Bond joined the company as business development VP and will be responsible for directing all of Lucent’s m&a activities. MonsterDaata.com – The provider of real estate due diligence and research tools has promoted John Evans to the post of EVP of corporate development and CFO. Newell Rubbermaid – William Alldredge was appointed to the newly created position of president of international business development at this consumer products manufacturer. Novell Inc. – Carl S. Ledbetter has joined Novell as SVP of business and corporate development. Novex Systems International – Bruce W. Parker has joined the manufacturer of specialty building products as CFO, which includes responsibility for executing the company’s acquisition strategy. Printrak International Inc. – Piet H. Lesage assumed the position of VP of international business development of the public safety information systems provider. ProtoSource – Jim Sette, a newly appointed VP of business development, will concentrate on acquisitions and sales at this Internet company. PureSafety.com – Ron A. Kirsch recently joined the company as VP of business development. Raytheon Co. – Kenneth C. Dahlberg was appointed EVP for business development and president at Raytheon International Inc. SED International Holdings – Ray Risner has been named EVP and treasurer at this distributor of microcomputer and wireless communications products. He will also be responsible for acquisitions. Sunbeam Corp. – Marc R. Shiffman, 32, has been named SVP of corporate development and strategy and president of e-business. TeleTech Holdings Inc. – Michael E. Foss has been appointed CFO of TeleTech Cos. Group, where he will oversee the company’s finance, m&a, and corporate real estate activities. TeleTech provides e-commerce-enabled customer management services. Wind River Systems Inc. – The provider of embedded software named Marla Stark as VP of intellectual property and legal affairs, in which position she will manage corporate legal issues, especially relating to m&a. Wireless OnLine – Brian Curran was named VP of business development and strategy at this wireless telecommunications firm. Wisconsin Central Transportation – Richard P. White has been named VP of corporate development. Health Care Investments3rd Q 1999 No. of Value Deals ($mil)Health Care Services 53 $400.5Medical Instruments & Devices 51 204.7Biotechnology 39 314.2Pharmaceuticals 9 58.9Source: PricewaterhouseCoopers<\TBL>