An interview with Carter McClelland, renown investment banker and founder of Union Square Advisors.

Carter McClelland is the chairman and founder of Union Square Advisors, a San Francisco and New York-based investment bank focused on the technology sector. Prior to founding Union Square in 2007, he was chairman of Bank of America Securities, where he oversaw the bank’s global corporate and investment banking relationships. Prior to that, Mr. McClelland oversaw Deutsche Bank’s businesses in the Americas. Mr. McClelland began his investment banking career at Morgan Stanley, where he held numerous positions in investment banking and ultimately served as the firm’s chief administrative officer. Interestingly, Mr. McClelland was one of the first 300 employees Globally at Morgan Stanley when he joint (there are over 60,000 now!). Because of his engineering background, Morgan Stanley chose him to help found the firm’s technology practice.“They looked around the room for a Californian with an engineering degree,and there was only one! So I guess I made the cut!’ Mr McClelland was also one of the key Morgan Stanley investment bankers involved in Apple’s IPO in 1980.

Carter’s list of achievements is pretty long…and to top it off…he’s philanthropic and entrepreneurial by nature and
is a member of the board of Echoing Green, a New York-based not-for-profit that provides seed capital to social entrepreneurs. Carter’s career is nothing short of extraordinary and his ability to be in the right place at the right time- when mega transactions are in the air is something I personally aspire to have.

A Bit about Union Square Advisors

Union Square Advisors is a boutique investment bank, based in the US. The firm’s exclusive focus is on TMT transactions. Union Square Advisors has completed deals with the likes of Permira, Fastly, DocuSign, and Many other industry leaders. The boutique bank played a pivotal role in the historic $67 billion merger of Dell + EMC (amongst other noteworthy transactions listed below). As the technology sector has matured significantly, Union Square has witnessed this change in investment banking and in high tech since its debut.

Noteworthy recent transactions

  • Union Square Advisors served as exclusive financial advisor to Actifio in its acquisition by Google.
    On December 2, 2020, Union Square Advisors announced that it provided M&A advisory services to Actifio, which has entered into an agreement to be acquired by Google. Actifio provides backup and disaster recovery (DR) — offering customers the opportunity to protect virtual copies of data in their native format, manage these copies throughout their entire lifecycle, and use these copies for scenarios like development and test.This agreement to acquire Actifio further demonstrates Google Cloud’s commitment to helping enterprises protect workloads on-premises and in the cloud. Actifio’s business continuity solutions will help Google Cloud customers prevent data loss and downtime due to external threats, network failures, human errors and other disruptions.
  • Union Square Advisors served as lead financial advisor to Permira in its investment in Clearwater Analytics.
    This transaction shows the firms continued momentum in providing strategic advice to leading financial sponsors and companies in the enterprise software space. Clearwater Analytics is a market-leading SaaS provider of investment accounting and analytics and announced that it will receive a new investment led by investment firms Permira, Warburg Pincus, Dragoneer Investment Group and Durable Capital. Clearwater Analytics helps thousands of leading corporations, insurance companies and asset managers by providing unified, highly-compliant, and powerfully-automated investment accounting, reporting, and analytics. The new investor group will further Clearwater’s innovative leadership and strong organic growth.
  • Union Square Advisors served as financial advisor to Fastly Inc. in its acquisition of signal sciences.
    This transaction demonstrates the firms continued momentum in providing strategic M&A advice to leading enterprise and security software companies.On August 27, 2020, Fastly, Inc. (NYSE: FSLY), provider of an edge cloud platform, today announced that it has entered into a definitive agreement to acquire Signal Sciences (“Signal Sciences”), for approximately $775 million in cash and stock. The acquisition will expand Fastly’s robust security portfolio at a time when security at the edge has never been more critical. Signal Sciences’ strong, developer-first web application and API protection solutions will bolster Fastly’s existing security offerings to bring customers a unified edge security solution.

5 Key takeaways from the interview

  1. Why did you decide to found your own investment bank? as opposed to join at a high level at an already existing investment bank?

Well that’s an interesting question. It’s never easy to start up your own investment bank but I wanted to do it because I saw an opportunity in the market. I was hired at Morgan Stanley very early on in the lifetime of the bank. Back then they had 300 people worldwide — it was a baby company. It was really a fun time to enter a small partnership and to be there when the annual compound growth rate of people was 35% a year. When I left 22 years later, there were 11,000 people. So I had a great deal of experience from my role at Morgan Stanley and various other banks and knew the Technology sector quite well and I knew it was a case of things going onwards and upwards and I wanted to create a specialist firm such as Union Square that could specifically cater to the rising needs of tech firms’.

2. How does one build up their ‘brand’ as a boutique investment bank? especially when you first start off?

‘ Building a brand from scratch is a very tricky thing. Thankfully Ted (co-founder of Union Square Advisors) and I had a lot of people rooting for us, and we had amassed over 30 years of experience in the technology investment banking sector, so we had some confidence that we would do a good job. In terms of the brand, theres two elements to it. Firstly, the people you hire and secondly, the quality of work you do for your clients and both elements rely and effect each other. You have to be very good at selecting people and seeing their potential. Thats why I interview so much, even at the analyst level, its very important and I’ve gotten good at interviewing candidates in their early stages- it’s something I did quite a lot at Morgan Stanley and I still stay involved in interviewing at Union Square Advisors just because I know how important it is to hire the right people who will create and be part of the brand’.

3. How did you find Ted Smith your co-founder? (did you look for any particular qualities, specialization, different views?). And following on from that question- what are some red flags when evaluating a potential co-founder- what kind of people should you not have as a co-founder?

‘ I met Ted whilst I was working at Morgan Stanley, Ted also began his career at Morgan Stanley, where he was an early member of the firm’s technology investment banking group, so he specialised in Technology which was important for me. I also knew what kind of a banker and person Ted was so It wasn’t a hard decision. Ted also has over 30 years of experience executing transactions totaling many tens of billions of dollars in value, working with several of the largest and most influential technology companies — including IBM, Microsoft, Oracle, Google, VMware, EMC, Informatica, SAP, Citrix, Nuance and Guidewire, as well as a wide range of high-growth public and private technology companies. We both brought in experience from similar yet diversifies areas within technology which I think is very important. In terms of red flags, since investment banking is very relationship and reputation reliant, I would say to be careful of those people who might damage relationships and reputations, those two things take a long while to repair.

4. What is key to having a successful deal team?

‘ Having people that are good at what they do and enjoy what they do are the two most important things to a great deal team. You spend hours, weeks and months on deals, so if you don’t enjoy it then it will come through very quickly in the quality of work you produce and in your attitude within the team. It’s something you just can’t hide’.

5. You’ve retained entrepreneurism as one of the cornerstones at Union Square. Why is it important to keep that spirit alive there?

‘Most companies we work with are founded and still run by entrepreneurs. The point we make is: “We live in your shoes. We know what it’s like to start a company. We know the stresses and strains of building something from scratch. We know the pressures to meet payroll and make revenue every quarter. So we get it.” It makes us scrappier and better service agents if we’re focused on doing the best possible job, because things don’t get teed up for you like when you’ve got a business card that says Morgan Stanley. We’ve gotta earn our supper every day of the week’.

6. You have mentored Frank Quattrone and you have also simultaneously taught a class at Stanford while being at the head of the world’s biggest banks. How did you manage to do these activities simultaneously?

I enjoy teaching very much. If it wasn’t for two particular professors at Stanford, I don’t think I would have event gotten interested in investment banking, and I certainly wouldn’t be where I am today..so I have a lot to be grateful for and I’m trying to pass it forward. Also, Stanford has such an important role to play in a world where one of the biggest issues is workforce displacement through technology. Stanford sits at the epicentre of all that and is an important part of the solution. Forty percent of the undergrads coming out of Stanford graduate in computer science, a stunningly high number, so I hope that I can positively impact some of these grads in one way or another’.

Last words from Carter: Last piece of advice for the founders and future founders among the audience

‘Have fun. Try a few things. If they work out then great!- If they don’t then don’t hang around- be proactive but don’t be in a rush’.

Huge thank you to Carter McClelland for this insightful interview- and thank you for reading.