Moving Metal

THE BROKER BEHIND THE IPO D onaldson, Lufkin & Jenrette (DLJ) was the invest- ment banking and brokerage firm that managed Reliance’s 1994 IPO. Founded by William H. Don- aldson, Richard Jenrette, and Dan Lufkin in 1959, DLJ was established as a “Research First” shop to fill a major hole in the financial industry at that time: the lack of in-depth research and analysis to provide buyers with the information they needed to make good investment decisions. The company chose to ignore the big blue chips and focus on small-growth compa- nies like Reliance. “We figured that if you were going to invest in a small-growth company, which wasn’t very liquid, you couldn’t just jump in and act,” said founder Richard Jenrette. “You really needed to know the company well.”

Reliance Board member Doug Hayes was a partner at DLJ and had opened its West Coast office in 1986. He later recalled that “DLJ didn’t have the same huge infrastructure as a Merrill Lynch or a Goldman Sachs” and had a small staff. However, “they were really very good,” he said, “and as a result, we had an outsized impact on the world around us.” By 1994, DLJ was one of the most respected firms on Wall Street. When Reliance decided to go public that year, DLJ helped sell RS stock to potential investors by conducting its trademark deep research into Reliance’s operations, finances, and management, and then preparing and distributing a comprehensive 28-page prospectus that summarized the data. Hayes was Reliance’s champion within DLJ, arguing that the company had the credibility, the trust, and the style necessary not only for the IPO but also to attract investors in the future. He put his professional reputation on the line for Reliance and was gratified when it outperformed other companies that had relied on slogans

Doug Hayes

rather than solid market data to sell their stock. “I take great pleasure in that,” Hayes later commented. “My partners trusted me that this was a gem of a company, and so it got every bit as much a marketing push as any other company. DLJ therefore did an excellent job for Reliance.” DLJ was bought by Credit Suisse in November 2000 for $11.5 billion, but its name is still used by the Swiss bank for its private equity operations.

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