ALLEY-OOP: L.H. Friend Quietly Did $322 Million in Deals Last Year
By RAJIV VYAS
L.H. Friend, Weinress, Frankson & Presson LLC dates back nearly 20 years and counts college basketball star and onetime New York Knick Lawrence H. Friend as its key co-founder.
But the Irvine investment bank’s current form really dates back to 1998, when Chief Executive Gregory Presson led a management buyout of the firm. Since then, L.H. Friend has racked up more deals each year, even as investment banking weathers its worst slump in years.
“We knew it was a tough environment,” Presson said. “We stayed focused on the transactions that we were working on and happened to close more deals.”
L.H. Friend does mergers and acquisitions, private placements and other financing for midsize technology, healthcare, consumer products companies and others. Last year, the firm said it closed 12 deals worth $322 million. That was up from nine deals worth $282 million in 2000 and five deals valued at $55 million in 1999.
Among the deals: L.H. Friend worked with Beverly Hills hair restorer Bosley Medical Group on its $45 million sale last year to Japanese wig maker Aderans Co. Also in 2001, the firm worked with Irvine electronics broker Rand Technology Inc. on a recapitalization.
“This has not been a good market, but Greg has some good people there,” said Mike Ridley, a partner at Newport Beach’s Good Wildman Hegness & Walley, a boutique law firm that’s worked with L.H. Friend. “He is very through, very smart and very cautious. He plays golf just like he does business deals,totally focused.”
In its early days, L.H. Friend catered mostly to mutual fund managers and other institutional investors looking to buy shares in midsize companies. Larry Friend, who died four years ago, started the firm in 1984 with Steve Weinress, still a managing partner today.
Friend started in investment banking at Sutro & Co. in San Francisco and later worked for Cantor, Fitzgerald & Co. and Bear Stearns & Co., where he handled the San Francisco and Los Angeles offices.
Basketball was Friend’s first career. In 1957 he was an All-American at the University of California, Berkeley. That same year, he was drafted by the Knicks and played in the 1957-58 season before a knee injury ended his days on the court. He later went on to be the largest owner of the Phoenix Suns and a co-owner of the L.A. Aztecs soccer team.
Friend quietly grew L.H. Friend as an institutional brokerage, said Presson, a co-founder of Cruttenden & Co., now Roth Capital Partners LLC.
“I didn’t even know that the firm existed here until I left Cruttenden,” he said.
Presson said he met current managing partner and co-founder Carl Frankson on the golf course. Both he and Friend talked him into starting an investment banking practice at L.H. Friend rather than striking out on his own, he said. Presson joined in 1992.
While L.H. Friend is doing more deals each year, the firm’s low profile hasn’t changed all that much, according to Presson.
“We just don’t have to go to the general public and talk about how wonderful we are,” he said.
But L.H. Friend has seen changes since Presson joined. The investment banking practice he started at the firm now is its main growth driver.
The practice, which started with Presson and an assistant, has nine bankers in Irvine and five other support workers. Investment banking accounted for half of the firm’s $7 million in revenue last year, Presson said.
In 1998, Presson led L.H. Friend’s buyout from Chicago-based Olympic Cascade Financial Corp. A year earlier, Friend, who was suffering from cancer, sold the firm to Olympic for more than $1.4 million for estate-planning purposes.
In the wake of the buyout, L.H. Friend is one of a handful of small, independent Southland investment banks. Rivals include Los Angeles investment banks The Seidler Cos., Barrington Associates, Greiff & Co., Wedbush Morgan Securities and Crowell Weedon & Co.
Roth Capital also is a competitor. Sources say the two firms talked about combining in 1998 and 2001 but a deal never clicked.
In just about all of its mergers and acquisition work, L.H. Friend represents the seller. The firm has taken part in initial public offerings but doesn’t consider that its specialty, Presson said.
L.H. Friend has 35 people, with almost half in investment banking and the other half in institutional brokerage. The firm hasn’t had any major layoffs in the past two years but has had to seek out new areas of work and keep a handle on costs, Presson said.
“I would be kidding if I didn’t tell you that it has been a tough couple of years,” he said.
L.H. Friend has turned a profit for every year but one in the past 18 years, Presson said. The only annual loss came in 1998.
Christopher Halloran, another L.H. Friend managing director, said Nasdaq’s late 1998 meltdown caused a deal the firm was working on that year to fall through.
“And we had trading operations in Chicago that were associated with Olympic Cascade that we had to shut down,” he said.
