PierCap Partners Take Holistic Approach to M&A

San Diego Business Journal
FINANCE: New Investment Bank Won’t Parcel Out Process
By Sarah de Crescenzo
Published August 15, 2016.

San Diego — An investment banker and the head of marketing operations for a division of the nation’s largest energy retailer have teamed up to open a Del Mar-based investment bank focused on mergers and acquisitions.

Ashish Jariwala and Zaheer Dhruv, who met about 10 years ago, recently launched PierCap Partners LLC, the name a reference to the architectural element that manages the stresses between a bridge and the piers that support it.

The founding partners, also the firm’s managing directors, said they intend to limit the number of transactions to ensure they both are involved from start to finish.

“We’ve consciously decided we’re only going to work on a small number of projects,” Dhruv said. 

That will set them apart from other firms, which often categorize projects into tiers and have partners focus solely on the top section, Jariwala said.

“If you use a cookie- cutter approach you’ll find that you’re going to be always reactive to all the forces and stresses,” he said. “No company is the same; no market is the same; and no one approach is going to help every business achieve their best results.”

Personal Experience

Jariwala dates his interest in smoothing the way for companies to grow through acquisition or be sold to the process he experienced when selling his first company, an industrial manufacturing business.

He led the sale process himself.

“I wouldn’t recommend it,” he said, recalling the laborious experience of trying to run a business and to sell it simultaneously. “Buyers are very smart, very sophisticated and throw a lot of resources at a transaction before they actually seal the deal.”

After selling the company, he transitioned to a career in investment banking, working at Manhattan-based firms including McFarland Dewey & Co., where he advised companies in similar situations.

“I learned the best practices from them,” said Jariwala of his time at McFarland Dewey, whose management team included a former partner with Morgan Stanley, one of the nation’s top financial advisors. Most recently he worked at San Diego-based mergers and acquisitions investment banking firm Objective Capital Partners LLC, which focuses on transactions for private companies valued up to $500 million.

Expanding Businesses

Dhruv comes to the team from Direct Energy, the nation’s largest energy retailer. He was most recently based in Pittsburgh as head of marketing operations for Direct Energy Business. He has also worked for a private equity firm, Denali Partners, in Minnesota.He said watching his father, a cardiac surgeon, run his own practice spurred his lifelong interest in how businesses can expand and grow successfully.

The venture is backed by family and friends, though Dhruv said there has been interest from angel investors and that PierCap plans to consider offers from angel and other investors “relatively soon.”

Alan R. McFarland, a managing member at McFarland Dewey, and former McFarland Dewey partner Drummond C. Bell III are senior advisors.

More M&A on Horizon

A KMPG survey of U.S. merger and acquisitions executives last year found that 91 percent planned to initiate at least one acquisition in 2016. That was up significantly from a 2014 survey, when 63 percent said so.

The sectors in which KPMG forecast the nation would see the most deal activity this year included pharmaceuticals and biotechnology, a key area for San Diego.

Roughly half of the executives told KPMG the main factor spurring their interest was large cash reserves.

According to Deloitte’s annual look at the merger and acquisition market, 2015 was the busiest year ever for mergers and acquisitions, with more than $2.1 trillion in transactions in the United States alone. Globally, the volume topped $4.7 trillion. 

Deloitte surveyed nearly 2,300 executives at U.S. corporations and private equity firms for its third annual M&A Trends Report, which found that 87 percent of respondents expected their deal activity this year to meet or better 2015’s record pace.

Dhruv and Jariwala said they decided to open the new firm this year because it was the right time to make the next step in their respective careers.

“It certainly helps that we are still in a healthy M&A environment,” Dhruv said.

Timing of Launch

PierCap Partners’ office is in a three-story Del Mar office building called The Timbers that overlooks Interstate 5. 

Opening the office in Southern California was a professional and a personal decision, they said: San Diego’s economy and its sunny weather were both draws.

Jariwala and Dhruv plan to work with privately-held and family-owned businesses with revenues from $10 million to $250 million on sell and buy-side mergers and acquisitions, divestitures, transaction advisory, valuations and opinions and strategic assessments.

“We help businesses think about how do you position yourself and how do you close the gaps before you make that first step,” Dhruv said. “There’s a lot of firms that are interested in just getting the deal done — you can Google how to value a company — but the combination of our experience is unique.”

That spadework will better prepare companies to negotiate from a position of strength, with multiple offers, Jariwala said.

“The last process we ran on the sell-side, we had 35 offers on the day they closed,” he said.