Based in New York, my latest private equity sector recommendation is an independent investment bank that serves clients by avoiding the conflicts of interest inherent to Wall Street’s biggest players, explains Mark Skousen, editor of Private Equity Trader.
Roger Altman, a former executive at Lehman Brothers and Blackstone and deputy Treasury secretary in the Clinton administration, founded Evercore Partners (EVR) in 1996.
Firms like Goldman Sachs and JP Morgan want to underwrite and trade. That can cloud their vision and divide their loyalties when they dispense advice on deals. Evercore doesn’t have those conflicts. Rather, it sticks to doing deals and managing assets.
Merger and acquisition activity is likely to surge in the months ahead. During the last six years, companies have cut costs to the bone, laid-off nonessential personnel, and refinanced their debt at lower levels.
But revenue growth for most of them is still at low- to mid-single-digit percentages. In order to boost the top line, companies need to make acquisitions. Many of them will turn to Evercore.
While the company specializes in media, technology, and telecom, it has diversified across several other industries. Plus, Evercore is expanding internationally. It now has offices in Mexico, Britain, Brazil, and Hong Kong and strategic partners in China, Japan, India, Korea, Russia, and Argentina.
The company’s numbers are excellent. Earnings soared 64% on a 47% increase in revenue. Assets under management now top $5 billion.
The economy is finally beginning to gain traction. But the economy still is growing too slowly for many companies to count on a big boost in consumer and business spending.
In addition, a rising equity market gives potential acquirers more firepower, as many deals are done all—or partially—in stock. As business confidence improves with the economy, more deals are likely to be announced.
In sum, Evercore Partners is a premier independent investment bank with superb management, strong fundamentals, and excellent growth prospects. You’ll earn a 2.1% dividend, too.
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