EF HUTTON & COMPANY, INC.
INDUSTRY: Venture Capital, Acquisitions, Financial Services
INVESTMENT THESIS: Growth Equity, Strategic Acquisitions
ROLE: President of Venture Capital Subsidiary, Head of Merchant Banking
INVESTMENT HIGHLIGHTS:
Mr. McGrath spent eight years at EF Hutton & Company, Inc., serving as President and a director of its venture capital subsidiary Hutton Venture Investment Partners, Inc. ("HVIP"), where Mr. Pica also served as a Board member. HVIP raised one of the first publicly-traded venture capital funds, with nearly 800 shareholders limited to the parent company's employees. After raising three funds and deploying them into more than 20 investments, Jim was asked to also head the firm's merchant banking activities and was appointed Senior Vice President of the parent corporation as well.
The firm's varied merchant banking investments represented several hundred million dollars in capital (over 20% of the firm's assets) deployed into more than 25 leveraged acquisitions, strategic investments, equity-in-lieu-of-fees investment banking positions, and non-traditional venture capital positions. Mr. Pica, also a corporate Senior Vice President, played a pivotal role in emplacing critical investment disciplines, guidelines, and processes within the merchant banking operation.
HVIP venture capital investments included, among many others: Redgate Communications which was sold after one year for a 300% return, and which later -- with Mr. Pica's personal guidance--was merged into AOL as its cornerstone; Perceptron, Inc., which became a publicly-traded world leader in high technology machine vision; Miniscribe, Inc., an early disc drive company which IPOed through Morgan Stanley; Avanti Communications, Inc., in the PBX field; Charlton Associates, Inc., in the media storage sector; and Quantum Corporation, Inc., which was an early leader in disc storage and which also became publicly-traded. In some instances HVIP was the sole outside early investor; in other cases, HVIP was part of a consortium investing in pre-public rounds.
Merchant banking investments included strategic positions such as InstiNet, which, funded by a consortium of Wall Street firms, became a leading technology platform driving exchange trading operations; the acquisition of synergistic financial businesses such as commodity trading corporations; non-traditional venture investments such as California Biotechnology, Inc. and Monterey Vineyards, LP (where Mr. McGrath served as the director representing the General Partners’ interests in an offering sold through Hutton’s retail system); leveraged acquisitions such as Vista Chemical, Inc. and Arcadian Chemical, Inc. in the specialty chemical area or Microtel, Inc., and SouthernNet Inc. in the then-emerging fiber optic area.
FINANCIAL RESULTS: Positive, varied by individual entity
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