DC Advisory is a global investment bank that advises clients on mergers and acquisitions, debt raisings and restructurings, private capital markets, and GP strategic matters, with industry-focused teams operating across 24 geographies. Pulse 2.0 interviewed DC Advisory Director Shawn Neuren to learn more.
Shawn Neuren’s Background
When asked about his professional background and experience in investment banking, Neuren shared:
This summer will mark my 10th year as an investment banker and my 10th year with DC Advisory US. I joined DC Advisory, then Signal Hill Capital Group, one of the two predecessor firms that formed DC Advisory in the U.S., in 2016 upon graduating with my MBA from Carnegie Mellon University.
Since then, I have developed deep expertise advising clients on M&A and capital-raising transactions for technology companies. Specifically, over the past six years, I’ve refined that expertise to focus on companies operating in the information services space. While I work across many technology sectors, my core coverage is centered around B2B data, research, and analytics firms, predominantly those that sell into the financial services ecosystem.
DC Advisory’s Evolving Thesis
When discussing how DC Advisory’s broader strategic thesis has evolved over time, Neuren explained:
When Daiwa built out DC Advisory US in 2018, the thesis was obvious. Over the past two decades, technology has been bleeding into all aspects of the economy, so creating an M&A-focused investment banking platform centered around technology to help tell that story was critical.
However, and perhaps more importantly, DC Advisory was in the process of building a substantial presence in the U.S., an important part of the global network, which today totals approximately 750 bankers across 24 geographies. With 11 industry-focused teams, we offer tailored, independent advice on M&A, debt raisings and restructurings, private capital markets, GP strategic advisory, and access to unrivaled Asia investment knowledge.
While the technology thesis, especially for DC Advisory in the U.S., continues to be an important and relevant theme, our strengthened cross-border capabilities have been a significant growth catalyst and differentiator for us. They will likely continue to be a focal point as cross-border M&A becomes more prevalent.
Information Services Sector Thesis
When asked how his sector thesis has changed over time, Neuren detailed:
Our sector thesis is simple. As global assets under management continue to grow year after year, firms across the financial services spectrum will continue to demand differentiated and relevant data, research, and analytics to help generate alpha. Proprietary data, research, and analytics generally win the day. Beyond that, if you’re also deeply embedded in your customers’ workflows, you’re golden.
Over the past 12 months or so, with the emergence of artificial intelligence, we’ve been seeing a recalibration of the market with respect to that thesis. The markets are reevaluating what is truly proprietary and which workflows might be disrupted by emerging technologies. While the underlying thesis still rings true, I think industry participants will need to prove they have built the appropriate guardrails to either safeguard against an existential AI threat or leverage AI to enhance their market positioning.
One aspect I’m watching closely is that, for a long time, companies were shifting away from people-driven business models to enhance margins. For instance, an analytics platform in this sector built on market or macro data, or any other type of available market data, might have been more in demand than a traditional, people-driven research business based on the same data because of its margin profile.
AI can and will likely disrupt both. However, it’s difficult to replicate the human viewpoint and contextual value-add, which can ultimately be viewed as proprietary. It’s not too dissimilar to chatbots in customer service. You can build the most efficient, automated system on the planet, but people will more often than not prefer to speak with a human on the opposite end.
So, which path wins the day? It’s likely a balancing act and one that will take some time to sort out, although I suspect we’ll see a reversion toward demand for people-driven research businesses that leverage AI to enhance productivity, as opposed to platforms that neglect the human element.
Advising Founder-Owned Companies
When asked about his favorite memories from working at DC Advisory, Neuren recalled:
As a technology banker, given the fragmented nature of the sector broadly, I often have the privilege of working with founder-owned firms. It’s been extremely rewarding over the years to advise these founders through what might be one of the most important events of their lives, and possibly their families’ lives, while playing a small role in helping secure the financial futures of them and their loved ones.
Some of the best moments for me have been the conversations with clients following a close, when you get a heightened sense of how important and impactful your work and advice were to them.
Global Reach And Client Service
When discussing what differentiates DC Advisory and his practice from other investment banks, Neuren emphasized:
At a high level, over the past 15 years or so, Daiwa has been creating a truly global M&A advisory firm. From my perspective, our distribution capabilities and geographic reach, particularly in the middle and upper-middle markets across the U.S., Europe, and Asia-Pacific regions, are unparalleled.
One transaction sticks out to me as encapsulating the importance and effectiveness of our global coverage. A few years ago, we were hired by Unistrong, a China-based state-owned entity, to divest its U.S. subsidiary, Hemisphere GNSS, which we ultimately sold to CNHi, a DACH-based public company. Between us and our Beijing colleagues, we were working around the clock, literally across five different time zones, to make it happen. I can’t think of many other firms that can do that.
When you go a bit deeper, having worked with many people-driven consultancies, agencies, and research platforms over the years, we have an exceptional group of bankers who are dedicated to achieving the best outcomes for their clients, always.
We also take pride in the fact that we are just good, down-to-earth people. We strive to build tight relationships and enduring trust with our clients by providing thoughtful advice and guidance through complex situations.
The experience, knowledge, and ethos of our people, along with our shared, relentless approach to constantly doing and pursuing what’s best for our clients, set us apart from other firms that might look and feel similar at face value.
Neuren’s Investment Banking Style
When asked how he would describe his approach to investment banking and client relationships, Neuren explained:
Personally, I find the term “investment banker” to be limiting with respect to the level of partnership we provide to clients to help them reach their goals. To me, it’s a personal responsibility to help clients succeed in their endeavors.
Whether it’s helping to build out core management teams, form important commercial relationships, provide introductions to personal and professional relationships, or simply provide market updates and loosely strategize over a call, coffee, lunch, or dinner, it’s a long-term, “we’re in this together” mentality that begins on day one and persists through all aspects of the transaction process.
Building a foundation of trust is paramount. That comes from years of providing the right advice and guidance, so that when the time comes, my clients know they’re in the best hands to get it done.
It’s what I refer to as the “Jerry Maguire” approach. Providing financial advice is a small piece of the puzzle.
Preparing To Approach The Market
When asked what advice he would offer a company or founder considering a transaction, Neuren noted:
While each company and situation is different, there are a few things every company should address prior to engaging in any serious conversations around a potential transaction.
On the financial front, do you have the right infrastructure in place to quickly produce historical financials? Can you drill down into the general ledger details if and when asked? Do your internal reports tie, meaning does your profit and loss statement align with your customer data and other financial reports?
Consider engaging a firm to perform an audit or preliminary quality of earnings work to substantiate your internal financials. Speak to a tax advisor to ensure you have your ducks in a row with respect to income and capital gains taxes. Also, start thinking about where your business might be heading over the next five years and how that translates into financial performance.
On the legal and business front, check your contracts to make sure you have signed copies of material customer, vendor, partnership, and employment agreements. Start gathering important legal documents, including company formation documents, charters, and other materials that will likely be requested by a potential buyer or investor during diligence.
It’s also a good use of time to consult a lawyer regarding the optimal corporate and deal structure to minimize your potential tax exposure.
On the market and positioning front, every company and situation is different. However, in addition to refining your current and future core positioning, with the looming AI threat to many legacy business models, it’s imperative to start crafting your story around how you might use AI to benefit your business or why AI won’t necessarily hurt your business.
The market is evolving rapidly, and communicating that you’re on top of emerging opportunities and threats is becoming an important consideration for sponsors and strategic buyers looking to underwrite an M&A transaction.
Finally, regardless of your timeline, it’s never too early to begin forming relationships with parties you feel might be good partners if and when the time comes to pursue a transaction. Different buyers bring different strengths to the table, including different visions, playbooks, and long-term plans.
Having conversations early provides you with an opportunity to get to know buyers and their intricacies on your timeline. When it comes time to choose, you can have a high level of confidence and conviction that both sides are strategically aligned on the game plan and the operational path for getting there.
It all seems obvious, but taking the time to prepare appropriately is the difference between a clean, efficient exit and the alternatives, whether that is a long, drawn-out process or a failed process.
