Orange County Business Journal

Investment Bank Eyes OC as Regional Hub After McGladrey Buy

Jane Yu Thursday, February 23, 2012

D.A. Davidson & Co. is leaning toward consolidating its Los Angeles investment banking office to Orange County in the wake of its recent acquisition of McGladrey Capital Markets LLC in Costa Mesa.

The acquisition is expected to double the size of Great Falls, Mont.-based D.A. Davidson’s investment banking arm, which is known as D.A. Davidson Equity Capital Markets Group and headquartered in Portland, Ore.

The group manages about $30 billion in assets, according to Rory McKinney, managing director of the Los Angeles office, which opened in 2010.

McGladrey’s offices in Costa Mesa and Chicago have changed over to the D.A. Davidson name.

“We’re likely going to consolidate our Southern California offices into one location in Orange County,” McKinney said. “It makes more sense logistically to move 10 people south versus moving 35 people north.”

McKinney hinted at a possible location in Irvine, near John Wayne Airport.

A move is expected sometime in the fourth quarter.

“We’ll be looking to staff all different levels,” McKinney said. “This acquisition has raised a visibility for us in Southern California to selectively look for talent.”

McGladrey specializes in mergers and acquisitions in sectors including healthcare, energy services, aerospace and defense, and consumer products.

“McGladrey was an M&A-only shop,” McKinney said. “They did not have the balance sheet, research and sales capabilities to offer capital-raise for its clients. It’s a good marriage for us.”

McGladrey was an indirect subsidiary of H&R Block Inc. and associated with professional services firm RSM McGladrey Inc., which was recently acquired by Irvine-based accounting firm McGladrey & Pullen LLP for $610 million.

McKinney said mergers and acquisitions activity overall looks like it has hit bottom.

“M&A activity will slowly pick up as the economy improves,” he said. “There’s going to be continued capacity in the financial services and middle-market companies.”