So in the merger agreement we protected ourselves in a whole host of ways. First and foremost, we were going to be kept independent and have control of our own profits and losses. Second, we very clearly defined for the whole bank the lines of businesses we were going to be in and be responsible for. These points were clearly laid out in the merger agreement. As we got into the bank, though, it turned out that a number of the top executives did not agree with the merger agreement and were not going to abide by the terms of it. We ended up sitting down and saying, “This isn’t working.” So they accelerated the buyout payments and let the executives who wanted to leave out of their non-compete. That led a number of the top Montgomery partners, including me, to leave so that we could start a new firm.
I’m sure there are a lot of circumstances where acquisitions make sense and where the acquired company fits not just from a product standpoint but also from a cultural standpoint. For example, Cisco has done a tremendous job of acquiring a whole host of companies. Many executives in the acquired companies have risen to very prominent positions inside Cisco. Cisco clearly appreciates high-quality talent, intellectual and otherwise, and really pays attention to nurturing an entrepreneurial environment inside a large company.
Thomas Weisel Partners I wanted to put together a business model in which I could actually leverage the intellectual property that was built up inside an investment bank, resident in the research and investment banking departments. That’s how a team of us came up with this merchant banking concept in which you bring in the intellectual capability at the top and then build out and leverage the intellectual capability in private equity activities. To empower your research analysts and your bankers to spend a fair amount of time mapping and identifying the winners in the transforming economy, you take all the carry of your funds and fold it into the firm. The partners who are actually running the funds are partners of the overall entity, not just partners in the one fund they are involved with.
Today, two years into founding Thomas Weisel Partners, we’ve got about $2.5 billion of private equity and we’ve got a very unique partnership with CalPers, which is the largest pension fund in the United States, maybe the world. CalPers is an extremely good partner.
We operate as both a principal and an agent, working with higher-quality growth companies, particularly in the technology space since that’s where you can really partner with companies. At almost every point in a client’s history, from the very beginning when you have a venture fund that can actually start companies, to investing throughout all the private rounds as a principal, we can act as an agent and arrange private placements for private companies. We can arrange private equity and we’re doing that in quite a number of cases. We can obviously take companies public and we can sell them.
We were seventh in the mergers and acquisitions business last year for the technology space. We have already started this year with the two largest technology mergers announced so far. We think we’re going to be maybe not the largest but one of the better