Brooks, Houghton & Company Inc., is a merchant bank that provides investment banking services and principal investments to middle-market and emerging growth companies that generally range from $25 million and $300 million. Headquartered in New York City, Brooks, Houghton has a presence in Providence and South Kingstown, as well as Buffalo and Stamford, Conn.
Zene Colt is a managing director at the firm and has more than 30 years of commercial and investment banking experience. He has been active in the development of commercial applications of medical and bio-technical intellectual property connected with the Brown University’s Warren Alpert Medical School and the Greater Providence Chamber of Commerce.
PBN: What is your opinion of the current lending climate?
COLT: In today’s market we still see banks as being very conservative. Banks do seem more comfortable lending to much larger companies. They’re lending at a pretty safe and conservative cash flow. They want good asset-based security behind their loans.
PBN: What companies do you work with locally?
COLT: We do a lot of work with Bank of America. Their own investment banking division doesn’t necessarily compete with us because they’re a much larger bank looking for very large opportunities. We can provide investments of $300 million or even more but their scale is much larger. It’s a good fit for both companies.
PBN: What about the area’s smaller banks?
COLT: We give them a different product. They may not want to source other types of debt, such as subordinated or mezzanine debt, but their customer may need to have that. We also work with private equity firms. In some cases we help resolve problems with family-owned businesses, say, if one party would like to buy out the others.
PBN: Name a local example of working with a private equity firm.
COLT: Davis-Standard in Pawcatuck, Conn., was an established plastic extrusion company. They worked with a private equity firm that helped to make them profitable and competitive. We’ve also worked with Summer Infant out of Woonsocket, which was under-capitalized and wanted to expand their growth. We helped them with funding while still enabling them to own the company. They ultimately went from $40 million to $200 million in sales annually.
PBN: What opportunities do you see for growth?
COLT: The last year has been difficult, but there certainly are niches for growth, perhaps in the digital media or marketing field, or even telecommunications. Things cannot improve unless financing sources are willing to take on more risk.
Correction: The fourth question incorrectly quoted Colt as saying that Davis-Standard had financial difficulties.