In a recent 3DPrint.com PRO article, I had the opportunity to speak to Stephen Butkow and Bryan Dow, Managing Directors at Stifel’s Global Technology Investment Banking Group. The interview provided me with a number of insights into additive manufacturing’s (AM) booming private and public investment markets, but it also shed a light on the role that companies like Stifel play in those markets.
The firm was an ideal subject for this topic, as it has been involved in 13 of the most significant, recent AM deals. The latest is the sale of ExOne to Desktop Metal and the SPAC merger of 3D printing service bureau Fathom with Altimar Acquisition Corp. Beyond that, Stifel was led the ProtoLabs purchase of 3D Hubs, the sale of 3D Systems’ On-Demand business, and capital raises for ExOne, Stratasys, and Materialise. In total, the investment bank has participated in some 30 such deals over the course of the past decade, making it the financial institution with the largest role in 3D printing so far.
With more than 8,500 employees at over 400 offices around the world, the company is said to be one of the leading equity underwriters for middle market issuers. Stifel’s Institutional Group is broken into two major divisions: investment banking and research. The research analysts constantly examine industries and document their findings, both in public articles and in private reports for clients—not unlike the work that SmarTech Analysis performs for the 3D printing industry. According to Starmine, Stifel is the largest provider of U.S. small and mid-cap equity research.
In this department is Noelle C. Dilts, Managing Director of Engineering & Construction and Advanced Manufacturing. You’ll see her name in any number of market analysis sites watching the ups and downs of 3D printing stocks. When Dilts and Stifel rates a company a “buy”, the market may ask, “how high?”
Meanwhile, on the other side of the legal wall that separates the two, the investment banking side of the business advises corporations, private equity, and venture capital investors on their financial strategies. This includes whom to buy or merge with, how to raise funds, and where to invest. Most often, capital raises and mergers and acquisitions come to mind, but it is more complex than simply directing a corporation to acquire a startup. Stifel is involved in all aspects of the financial and strategy side of the deal including broad financial advisory, equity and debt underwriting, and serving as private placement agent.
Using collegiate colloquialisms, investment bankers at Stifel have their respective industrial majors and minors that they focus on. These can be specific industries or products, of which the company has broken down into 15 groups. In the case of Butkow and Dow, the Electronics and Industrial Technology markets are their majors, while specific products within those segments are their minors.
“Our job is to be deep in the trends, the themes—where the market and capital is being placed and where consolidation is happening. That’s why we’re industry experts. We have partners that are product experts, which is their major and our minor,” Dow said.
Within the Global Technology group that the duo head, digital manufacturing makes up the lion’s share, with Dow and Butkow having spent about 20 years each covering such technologies as 3D printing, digital textiles, and more.
Digital manufacturing has become more important than ever, thanks to weaknesses in the global supply chain highlighted by COVID-19 and supply chain disruption from events such as the Suez Canal incident. Not only are we witnessing a huge growth in quick product turnaround and customization due to the ubiquity of the internet, but disruptions to our existing supply chain made it more clear than ever that the re-shoring and decentralization of production needs to take place.
“There’s been a push for over 20 years and now there is a Renaissance away from offshore, high-volume manufacturing to onshoring more customization, more complexity, faster. If you think about digitization, you’ve got decentralized manufacturing. You can reduce the number of parts, consumables, and energy. The supply chain that was disrupted during COVID and variety of other events have helped provide more momentum to this Renaissance,” Dow said.
As attention was turned toward digital manufacturing amid the disruptions, other benefits of the technology also became apparent. This includes reduced inventory, mass customization, greater efficiency and more.
“Instead of carrying massive amounts of physical products, you can now maintain digital twins of whatever the product is. You’re manufacturing and reducing inventory, which is huge. There’s mass customization, more complex parts, new chemical properties, and material properties. It is possible to reduce manufacturing costs, remove, environmental impacts and have a more efficient manufacturing process. Digital manufacturing enables all of that, where high-volume, offshore manufacturing has been disturbed,” Butkow said.
It’s no surprise then that Stifel has been involved in so many recent transactions in the 3D printing space. And, as Butkow and Dow pointed out, this momentum will likely only feed into greater momentum, as the market activity spurs other businesses to have the determination to make their own mergers and acquisitions or IPOs. This, in turn, will feed further into Stifel’s own role in the sector.
To gain insight into what the future of the industry will look like, register for free to the SmarTech – Stifel AM Investment Strategies 2021 online summit. The half-day event will take place September 9, 2021 and will see Dow and Butkow, along with analysts from SmarTech, discuss with CEOs and experts from leading companies the state of additive manufacturing and the investment opportunities therein.
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