5 questions with Josh Tanzer

Josh Tanzer has been working in banking for more than 20 years and has ridden through enough peaks and valleys in the market to stay optimistic that the current economic climate will also pass one day.

Tanzer specializes in raising expansion capital for tech companies and is a managing director at Revolution Partners. Earlier this month, Memphis, Tenn.-based Morgan Keegan, the brokerage and investment banking arm of publicly traded Regions Financial Corp., acquired Boston-based Revolution Partners in a move to expand its tech focus.

PE Week Senior Writer Alexander Haislip caught up with Tanzer to get his thoughts on the acquisition.

Q: What does the deal with Morgan Keegan mean for you?

A:

It’s just starting to sink in now. We had been working on the deal from this summer. It feels better every day and it was a very good fit between our organizations. We were not for sale. Let me be clear. Morgan Keegan approached Revolution. I’ve had 200 emails and people asking me what my new email address is, but we’re continuing to operate as Revolution Partners and have a controlling relationship on our business. That was paramount for us.

Q: Lately, has there been much call for your firm to help companies connect with growth capital?

A: My business at Revolution is up 33% over last year and I’m having the best year since 2001. We’ve got an excellent pipeline going into 2009.

Q: What types of companies are able to raise money in this environment?

A:

Companies with greater than a $10 million run rate and profitable companies. I don’t know anything that is easy in this market, but that’s the sweet spot of what’s interesting now. There are parts of this economy that are rapidly expanding, such as digital media. Some of the clients we’re working with in the consumer digital media space are having remarkable growth, even in this market.

Q: Any other sweet spots?

A:

On the enterprise side, there are software companies that work with credit-giving institutions to collect debt. That type of business is growing rapidly. There are little corners of this economy that are doing well, or certainly OK. Companies that won’t sell are doing things that are very capital intensive and have slow revenue run rates.

Q: How has the hedge fund industry affected your business?

A:

The hedge fund guys are largely out of the market. You don’t have to be in this market every day to know that. Who’s replacing them? You have more and more family offices, international funds that are still active in Europe, and we are getting some interest out of Asia. Call them alternative fund providers. An amalgam of institutions globally that see this as a buying opportunity. Most investors are resting on their wallets to see what’s going to happen in 2009. But there are some mavericks who are trying to buy low.