For a small investment bank that likes to fly under the radar, Allen & Co is certainly getting involved with some big ticket deals. It’s just moved back into the top ten global rankings for M&A by advising on the massive $19bn acquisition of WhatsApp by Facebook. This follows a place on Facebook’s own IPO in 2012 and the flotation of Twitter on October last year.
Similarly, it has some big names on its payroll. Notable managing directors include George Tenet, the former director of the CIA, Bill Bradley, an ex-NBA basketball player and former U.S. senator and ex-Coca-Cola president Donald Keough. It also hosts an annual networking event in Sun Valley, Idaho, which is star-studded and attracts the attention of Vanity Fair and the New Yorker.
Why would a low-profile investment bank want to employ high profile names? Rather obviously, to open doors. Allen & Co is an old-school investment bank, relying on long-term relationships with clients rather than focusing on short-term deal activity.
Another big game that Allen & Co patiently hunted was, oh, just Google. The firm was one of three managing underwriters on its 2004 IPO along with Morgan Stanley and Credit Suisse. One of the main reasons for this was supposedly because one of its bankers, Nancy Peretsman, knew Google CEO Eric Schmidt at Princeton, and used that to kick-start a client relationship.
Peretsman is well-known as a big-wig investment banker in the media, telecoms and tech space, but remains, like the company she works for, publicity shy. However, an interview she gave with LeanIn last year suggests that working for Allen & Co is not like the cut throat world of the bulge bracket investment banks – she left her role as a managing director at Salomon Brothers for the firm in the mid-1990s.
“The mid-90s brought unique opportunities in the development of online e-commerce. My first investment was in a group that owned travel agencies which were expected to be transformed by their new online offering. Having researched the industry, I became convinced that this was a good idea and decided to make a million-dollar investment in the company. Yet, soon thereafter, it became apparent that the CEO had questionable ethics. Since I had implicitly endorsed him by way of our capital, I found myself believing that my entire career was ruined through the association.
I went to the owner of our firm, Herbert Allen, and shared everything I knew about the situation. He paused, looked at me, and said: “Leave it. You’ve learned a lesson. Just walk away.” So, I did.”
Allen & Co occupies an unassuming office on 5th Avenue, New York and has yet to expand into the City of London. It was founded in 1922 by brothers Herbert, Harold and Charles Allen, but the CEO position was taken over by Herb Allen Jr in 2002, who has worked to expand the range of services the bank offers. It does, however, still stick to the same bread-and-butter work of M&A advisory and managing money for wealthy individuals. Herb is on LinkedIn, describing himself as a 'merchant banker' and revealing that he has a BA in History from Yale. Good luck finding much more information about him - the firm doesn't even have a website.
Elsewhere in the company, which employs around 200 people, most senior investment bankers tend to have a bulge bracket pedigree – Morgan Stanley, Goldman Sachs, Credit Suisse and UBS all occupy the CVs of some of its MDs.
Even Allen & Co MD Shelby Bonnie, a former CEO of CNET and board member of Warner Music, started his career as a financial analyst at Morgan Stanley. A lot of MDs also have unusually long tenures at the bank – between 14 and 20 years. One senior investment banker, Andreas Lazar, even took a career break: after working at the bank for seven years between 2000 and 2007, he moved to Sirius Satellite Radio, before returning in August 2008.
A little bit of entrepreneurship seems to do wonders for those joining the junior ranks. Melissa Goodhart, an analyst who joined last year, spent time as an investment banking careers coach for other students while at university (along with internships), while Brogan Matthews worked as a microfinance manager for an organisation called Reach Out Cameroon at university.