Investment banking firm MergerTech Advisors is setting up shop in Orange County, bringing along a recently launched $50 million venture fund.
The San Ramon-based advisory firm specializes in mergers and acquisitions for technology companies with less than $100 million in annual revenue.
The new office will open near Fashion Island in Newport Beach in January.
“The long-term strategy is to expand the Newport Beach office,” said President Karan Khanna, local resident. “Ultimately, this could be the main office for MergerTech.”
The firm will keep its headquarters in San Ramon for now.
MergerTech Advisors has grown fast since Khanna and his brother, Nitin, started the company in 2009, with two deals that year, eight in 2010 and 24 this year.
Brother Act
The brothers are no strangers to startups or the tech sector.
They created Saber Corp. in 1998, a Port-land-based software company. Menlo Park-based private equity firm Accel-KKR in 2005 made an investment in Saber, which was sold to Plano, Texas-based Electronic Data Systems for $460 million in 2007.
Khanna said he and his brother saw a gap in the market on deals for companies that were “sub-$100 milion” on annual revenue.
“When we were with Saber, we saw that a lot of investment banks catered to larger transactions,” Khanna said. “Being from that world, we know there’s a lot that can be done there.”
MergerTech’s 2,500-square-foot office in Newport Beach is ex-pected to start with a staff of about 10.
“We’re planning on a couple of managing directors and three to four analysts,” Khanna said. “We’re bringing some people from the Bay Area, but we’re looking to hire.”
He said Orange County’s field of venture firms and individual investors led the firm to Newport Beach.
“A lot of our clients are from the East Coast or the Midwest, but having a presence here really helps in developing a good network,” Khanna said. “University of California, Irvine, is here, and you have Octane and Tech Coast Angels. And I’ve heard of K5, the new group.”
MergerTech already has been working with a number of companies in Orange County.
“There’s enough deal flow … down here in OC to open an office,” said Maneesh Goyal, a former managing director at Newport Beach-based Miramar Venture Partners who will oversee MergerTech’s 50 million venture fund here.
The fund is called MergerTech Capital and will target healthcare information technology product and services firms.
MergerTech’s expansion from the Bay Area to OC comes at a time when some local investors have voiced frustration about a prevalence of out-of-town money backing local startups. Others see Orange County as ripe for new arrivals because the lineup of locally based funds is relatively thin.
Some local venture funds—such as Okapi Venture Capital LLC in Laguna Beach and Versant Venture Management LLC in Newport Beach—also focus on healthcare technology, among other areas.
Room for Newcomer
Khanna said he sees plenty of room for MergerTech and its venture fund.
“There are so many entrepreneurs here in OC in technology,” he said. “There are a lot of good ideas and good companies that are developing—we’re here to make sure to get them connected.”
