Williams Financial Builds Its Book

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The New York Sun

When Chris Williams launched his own securities firm, he had no idea that being black would help bring in business. For one thing, Mr. Williams, who believes in meritocracy, would never ask for business on the basis of race.


“I don’t feel comfortable pitching minority status as value added,” he says. “If it helps satisfy some clients’ needs, great.”


Also, in 1994, corporations were not yet committed to supporting minority owned businesses.


Instead, Mr. Williams planned to build a successful bond firm selling the derivatives-laden products his group had initiated at Lehman Brothers. He also envisioned trading equities at 6 cents a share. Oops.


“About five years into building the firm, I asked Chris, ‘Whatever happened to the business plan?'” his wife Janice Savin says jokingly. Her interest is more than casual. Ms. Savin works for her husband, as a principal in fixed-income sales.


Is it ever awkward to work at the same firm? At this, Ms. Savin laughs.


“Occasionally we’ll hire someone new, who doesn’t get it, since I use my maiden name. They’ll be upset to see Chris and me arriving in the same taxi, or being together. We have to take them aside and explain that we actually are married.”


What’s he like as a boss? “Fair beyond belief,” his wife says. “He’s level-headed, a good person to work for.” How many husbands earn those accolades?


These days, Williams Capital Group has grown to be the largest minority-owned investment bank by volume of business. It ranks among the top 20 underwriters of investment-grade corporate debt, co-managing and increasingly lead managing scores of deals each year.


They are also a creditable equity trading house, relying on relationships and market-oriented research to get them to the institutional table.


None of this has been easy. Mr. Williams has had to constantly adjust his business model to accommodate industry downdrafts that have felled any number of larger and better-financed shops. There are days when being an entrepreneur may not seem quite as glamorous as he once thought.


As an ambitious young man growing up in New Milford, Conn., Mr. Williams decided to become an architect. He applied to college, a process more mystifying than usual since neither his father, a repairman for Connecticut Light and Power, nor his mother had more than a high school education.


On the advice of relatives, he chose Howard University, a school traditionally for blacks, in Washington, D.C. Mr. Williams graduated with a degree in architecture and joined a firm in New Haven.


“The school presented a lot of role models – people who were successful – and who looked like me. It also presented a somewhat unrealistic view of the world. The city had a black mayor. All the authorities were black. It was an excellent experience, certainly very different from New Milford.”


After a couple of years, architecture paled, and Mr. Williams pursued an M.B.A. from the Tuck School at Dartmouth College. Ultimately, he interviewed at investment banks, though he was initially repelled by some Gordon Gecko-like figures he met.


He joined Lehman, and after a stint in investment banking moved over to debt capital markets.


“I was responsible for the structured products desk. We put together debt instruments and derivatives to help get the lowest-cost financing. We developed good relationships with the clients and with investors.”


Confident of his group’s recognized expertise and reputation, Mr. Williams’s team left Lehman in 1987 to become a separate division of Jeffries and Company. Three weeks into the partnership, the team did a $150 million deal with Sallie Mae – the largest and most profitable transaction they would ever complete as part of Jeffries.


Almost immediately, margins began to shrink. “What had been cutting edge became vanilla. The high margins for that type of trade attracted a lot of people. By the beginning of 1994, Greenspan began tightening, and people began to see losses on derivatives deals.”


Soon, Williams Financial realized they needed to offer a broader spectrum of debt and equity products, and to leave Jeffries. In 1994, the firm set up on its own.


It was a scary time. Mr. Williams was the first to recognize that the world did not need another firm to trade equities. “It was hard to differentiate ourselves. We were providing a commodity service to institutions that were covered by everyone. We set up in January and didn’t get our first order until March. I mean, the phone literally did not ring.”


Mr. Williams and Ms. Savin had to dip into their personal savings to keep the firm afloat, but gradually orders began to flow. The firm hired top execution people and turned out market-oriented stock advice – not the stuff designed to win votes for analysts.


They also began to sell money-market products, and call on commercial paper issuers. Their first big client in this arena was Colgate Palmolive, which opened many doors.


“We don’t misrepresent where we can add value,” Mr. Williams adds. “We’re realistic about our strengths. We listen to our clients and try to tailor our efforts to what they’re not getting elsewhere.” This approach paid off. Bit by bit the firm’s book of business grew.


Mr. Williams continues to adjust the business model. They have started a service-oriented money market fund for corporate clients and have also recently jumped into the private equity arena, raising about $125 million to invest in small- to midsize companies.


Williams Capital Group today has about 50 employees, with offices in New York and a small outpost in London. The firm is consistently profitable and growing in stature and reputation.


Has the struggle been worth it?


“I like being in control of my destiny, to the extent that I am in control,” Mr. Williams said. “I enjoy being able to map my own direction. There are a lot of emotional benefits to owning your own firm. But, the buck definitely stops here.”


The New York Sun

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