Terence Kawaja recently announced that he will be leaving investment banking firm GCA Savvian to start his own firm, LUMA Partners.
Kawaja discussed the new firm and his strategy with AdExchanger.com.
AdExchanger.com: You have suggested investment banking needs disruption? Why?
TK: Fundamentally, I think some aspects of the banking model are broken. Most bankers effectively act like real estate agents – they sign up a client and then take them out to market. In other words, they obtain inventory and then try to sell it. That model works fine for mature companies or divestitures but not so well for emerging technology businesses. Think about it – if you have a great company in a growing sector with a bright future, why would you proactively sell? There is absolute adverse selection at play here: the weaker companies are SOLD and the better companies are BOUGHT. The “banker” that calls up the potential strategic acquirer is hardly unbiased – they're selling inventory.
LUMA Partners acts as a “strategic advisor” representing companies that are BOUGHT. We spend a tremendous amount of time with the large strategic buyers – with both development executives as well as business and product leaders – to understand their strategic goals. We use our deep knowledge of the business models, markets, companies and executives in the space to help inform and identify the best possible acquisition candidates that can deliver the capability necessary to fulfill those strategic goals. We do this on an objective basis and then try to make the deal happen once the target is identified. Ultimately we represent and get paid by the company being bought but we start with an objective value add to the strategic. It’s a real win-win approach.
We also represent companies who have a great business but get inbound strategic interest – which can be very distracting and time consuming for growth companies. We help guide the discussions and manage the inbound interest. Invite Media was a classic example of this type of assignment. Many times, these discussions do not result in a deal - “no” is a very powerful word.
Finally, we represent strategic companies who are looking for deep industry expertise to determine the right strategy, capability and companies to pursue. Emerging digital technologies represents both a significant challenge and opportunity to large media and technology companies. There’s 100 cents of downside in any digital deal so getting it right is paramount. We can help since we have both deep knowledge and a broad perspective.
What will be your investment bank's "philosophy," if you will?
LUMA Partners is all about adding value by thinking like a principal. We believe in being transparent and honest (regardless of how good/bad that is for the recipient) as the client is best served from this approach. Also, we believe in having fun.
You're entering the entrepreneurial world with LUMA Partners after years of watching entrepreneurs. What key experiences will you bring forward into your practice?
I have spent the last 21 years of my professional career working for other people. I left a great job at Citi running their global media business because I didn’t like the institutionalization and bureaucracy. In fact, I have always been an entrepreneur – I started a paper route at 9 years old and have had several “businesses” through high school and college. I spent a year as the CFO of a client company and took them public - so I have some start-up operating experience as well. You could say entrepreneurism is in my blood. I’ve also learned a lot from clients over the years and will apply those learnings to LUMA Partners. LUMA is brand new but I am loving it already - from the mundane aspects of starting a company to deal success as an independent company.
Speaking of deals, when will you be available to "do" deals? Any guess as to when we'll see the first one?
The deal “doing” is already underway and I am working on several interesting situations. As for timing on the first one, that is coming very soon. Stay tuned…….
Is this a self-funded company? Will you hire employees?
There is absolutely no validity to the rumors that Digital Sky Technologies is investing in LUMA Partners at a billion dollar valuation - none whatsoever. Seriously, yes, it is a self-funded company. I have already hired employees, have office space and am looking for more smart people who want to make a difference, take on significant responsibility and have fun. It is called LUMA Partners and I anticipate scaling with additional partners over time.
You’ve mentioned “having fun” several times and have a reputation as a comedian. Do you see any conflict between your light-hearted demeanor and the serious business of deal advisory?
Ha – I only get that question from non-clients. As they can attest, I take my job very seriously but also believe in some fun. It is just my personality and I have always done business this way. I’ve told jokes in boardrooms from Aol to AT&T to Comcast and those deals turned out fine. At the end of the day, it is a differentiator. Besides, who couldn’t use a little industry self deprecation? It’s all in good fun. The videos are hopefully a demonstration of creative writing, some digital video technology savvy and social media marketing skills – again more differentiation from the typical banker.
3-5 years out - where would you like LUMA Partners positioned?
I have given a lot of thought to what kind of business I’d like to build. It is multi-faceted and will be revealed in time. In the interim, we would like to be considered a premium strategic advisor of choice to leading companies in media and technology.
Was your departure from GCA Savvian amicable?
It was. GCA Savvian is an excellent firm and I have great respect for the people there, many of which are friends. We have a cooperative arrangement and I look forward to exploring ways to work together in the future.
Your May IAB presentation on the ad landscape has proven to be quite popular – over 25,000 views to date on slideshare. Do you have any upcoming presentations?
Yes, I am speaking at Rethink Media, IAB MIXX, OMMA Global and Ad Revenue. I will be discussing how the landscape might change prospectively. And yes, there’s a video……
By John Ebbert
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