Matri x Capital Markets Group is now a division of Citizens Financial Group. (Image Courtesy Citizens Financial Group)
Matrix Capital Markets Group is used to helping businesses line up mergers and acquisitions.
For its latest transaction, the Richmond-based M&A advisory and investment banking firm was itself the subject of the deal.
Matrix was acquired last week by Rhode Island-based banking giant Citizens Financial Group.
Matrix, along with its nearly three dozen employees, including 20 in Richmond, are now operating as a division of Citizens, within the $226 billion bank’s investment banking arm, Citizens JMP Securities.
Financial terms of the deal were not disclosed. It involved an asset purchase that bought out Matrix’s 15 shareholders.
The deal ends Matrix’s 38-year run as an independent firm, a notable streak in an industry where consolidation of smaller firms into larger ones is common.
Matrix was founded in Richmond in 1988 by Scott Frayser and Jeff Moore and has since hit its stride by building a niche in handling deals for companies in the downstream energy and convenience retail sector.
The firm has been run in recent years by president Spencer Cavalier and Cedric Fortemps, co-head of the firm’s largest investment banking team.
Fortemps said Matrix began to search for a larger acquirer last year.
Cedric Fortemps
“The board decided to see if we could find a partner and a transaction that could build on what we’ve built thus far,” Fortemps said.
Matrix enlisted investment banking firm Houlihan Lokey to help in the search and negotiate on its behalf, along with the law firm Calfee as its legal advisor.
Fortemps said Citizen rose to the top of the pack of suitors in part due to JMP Securities’ track record of acquiring smaller firms like Matrix.
“They have acquired four other firms very similar to ours. Seeing the successes they had with those groups… the playbook is really to let the firms continue to operate the way they had,” Fortemps said.
Matrix’s Richmond office in the Gateway Plaza building downtown will continue to operate, as will its second office in Baltimore.
The Matrix brand will continue to be used for the time being but will eventually be phased out.
Fortemps said the firm’s success and particularly its growth in recent years has been fueled by its expertise in working deals for downstream energy clients – such as wholesale fuels distributors, propane and heating oil distributors – and convenience store and gas station chains.
Matrix’s rise in that sector began in 1997, when it hired Tom Kelso, who lived in Baltimore and owned a heating oil fuels distribution business. Kelso, who would eventually serve as the firm’s president prior to Cavalier, had a vision to launch an M&A firm for that industry.
“It took seven to eight years to grow it but eventually we were able to get a reputation of really high quality work and those successes on smaller transactions resulted in us being considered for larger deals,” Fortemps said.
Today, 21of the firm’s 26 investment bankers work on the team that handles deals for those industries. It controls about 40% market share for the M&A market for those sectors, Fortemps said.
The firm closes nearly two dozen transactions a year over the last five years and has closed 500 deals since its inception.
The typical value of its deals is more than $20 million, though the transactions it has closed over the last three years in the energy and convenience retail sectors have grown to $140 million per deal, Matrix said.
Its largest deal to date was closed last year, involving the $1.6 billion acquisition of convenience store chain Giant Eagle.
Matrix also works deals in other industries such as lubricants distribution, automotive after-market suppliers and car washes, as well as outdoor recreation and the marine industry.
After decades of representing buyers and sellers in M&A, Fortemps said the Citizens deal was a new experience for the Matrix team: being the target of the transaction, rather than the ones facilitating it.
“It certainly made me appreciate everything our clients have to go through on the other side of the table,” he said.