SAN FRANCISCO-- Stephen Doyle hadn't planned to visit Germany this summer.
But in the ever-evolving investment world of the 1990s, even the best laid plans of money managers often go awry. Change being the only constant in his business, the chairman and chief executive officer of Montgomery Asset Management, San Francisco, penciled onto his summer agenda a July 31 Frankfurt meeting with new partner Commerzbank Atkiengesellschaft.
"To be honest, this wasn't a partnership that we initially sought out, or that I particularly desired," said Mr. Doyle. "But when our former partners, Montgomery Securities, told us they wanted to sell their two-thirds share in the company, we were faced with the prospect of a new partnership. I have now come around to believe that our new partnership with Commerzbank provides us with a great new opportunity into world markets that we might not have had otherwise."
The deal, terms of which were not disclosed, was completed July 31.
Since its inception in 1990, Montgomery Asset Management has grown to manage approximately $10 billion in assets, of which $68 million is in tax-exempt assets . "When we first started, we had a handful of people, and today we now have about 180 working here," said Mr. Doyle. He credited the firm's growth to its long-standing policy of fostering "entrepreneurial spirit"; but when it came time to pick a new partner, that cause for success became a cause for concern.
"One of the primary concerns that we had with a new parent company was the bureaucracy that comes with a big institution," he explained. "We initially looked at about 35 potential buyers and eventually scaled that down to only three. Each of those three were banks, and only one was domestic. In the end, we decided that the offer best-suited to all our needs was from Commerzbank."
Mr. Doyle said that while the other suitors paid lip-service to the idea of Montgomery maintaining its independence, it became clear only Commerzbank would follow through. "It just made sense that since we offered them an expertise in the U.S. domestic equity market they didn't previously have, they'd encourage us to keep on doing what we do best," he said.
According to Mr. Doyle, the German bank, with its financial connections around the world, will open potential avenues that Montgomery alone would be unlikely to access. Mr. Doyle acknowledged that even a successful firm such as his required the facilities of a large, international entity to broadly open the doors in distant markets.
"Realistically, there is simply no way for us sitting here in San Francisco to really succeed on a broad scale in markets such as Japan without the facilities offered by an institution such as Commerzbank," he explained. "What I envision, and one of the positive outcomes we hope to see from this partnership, is the exporting of our money management knowledge and experience to other markets. . . . That's where Commerzbank will help with its international connections."
With a bemused smile, Mr. Doyle recalls an earlier foreign trip that clearly illustrated the frustrations of an independent money manager seeking to attract international investment.
"I was in Oman, in the Middle East, and I was waiting to meet with a sheik who, I guess, was one of the princes," he said. "Well, after spending most of the day sipping on really sweet coffee, they finally told me that the prince would see me. I walked into the room and then everyone began to bow as the prince entered. I half-jokingly turned to him and right off the top said 'So, how does a guy get to be a prince in this country?' Fortunately, he had a good sense of humor and laughed. But at the end of the day, I think I came home with only about $3 million in new assets. Our running joke here is that, if the market stays strong, that trip may be paid for real soon."
Is Mr. Doyle at all concerned about a potential clash of corporate cultures? "I was at first, but having met with a number of potential partners I was surprised to find that we have more in common with a German institution than we did with a British bank. There will likely be an occasional disagreement, but I'm convinced we complement each other quite well."
With an eye to future growth, Mr. Doyle added his firm now plans to hire one person from CommerzBank staff to work full-time with his San Francisco office. "We would expect this person to help facilitate op
por-tunities with the bank and international connections," he said. "Of course, there will also be other cross-pollination between ourselves and Commerzbank. While I expect there will be some bumps in the road, I am really looking forward to opening the doors that this partnership offers."