Mosaic capital expands in push for larger share of middle market.

Mosaic Capital Investment Bankers has opened a second office and added three senior level investment bankers in a push to corner a larger share of local, middle-market investment banking transactions.

David A. Cohn, David J. Herman and Charles H. Troe have joined the Sherman Oaks-based investment banking company as managing directors based in a new office in West L.A.

The new appointments double the number of investment banking professionals at the firm, joining Gordon Gregory, the firm's founder and chairman, Managing Director Stan Deakin, who heads up the firm's business valuation practice, and Vice President Jeff Shippy.

It comes at a time when merger and acquisition activity appears to be gaining momentum and valuations for these transactions is increasing*

"You've got 40,000 middle market companies," said Gregory. "My guess is over the next five years 20 percent of those companies are going to turn over. There isn't enough capacity among investment bankers."

Last year M&A deals began picking up after a number of years of inactivity as companies began to look for growth opportunities and equity capital firms and other investors saw their war chests for acquisitions balloons.

The large investment banking houses have focused their attention on multi-billion dollar deals. Small boutique firms that target smaller companies tend to be one- or two person operations. But with the additions, Mosaic becomes a larger player among the Gregory: firms specializing 'Over the in companies ranging in size next five years from $10 million 20 percent of to $100 million in (middle-market) revenues, companies are

"I think the going to turn landscape in over.' Southern California as far as investment bankers working in the mid-market arena is very highly fragmented," said Cohn.

By putting together a group of professionals with contacts and specialties in this mid-market area, the principals feel they can capture a market that has been neglected.

Cohn, a specialist in manufacturing, has owned two such companies and most recently ran a boutique investment banking firm, Berman Cohn LLC where he assisted in the sale of automotive aftermarket supplier Tomco Inc., and helped Denver-based printing company Spectrographics acquire another company. His has also worked for Beatrice Foods where he assisted in identifying acquisitions.

Troe, who as an attorney for 21 years, specialized in corporate finance transactions, has also been managing director of Taurus Group Ltd. and Barrington Associates, both investment banking firms, and most recently' ran his own investment banking firm West Ridge Associates LLC.

Herman, who served as chief executive of an automotive parts manufacturer, has had stints as a partner with West Coast Capital and as a director at Houlihan Lokey Howard and Zukin.

"I wanted to be part of a firm that had critical mass in terms of senior level people and other professional support and infrastructure," said Troe, whose practice has been heavily weighted in the medical device industry. "Really the coming together of these three additional people with Gordon is more of a merger of experienced senior level people."

The team believes that its cumulative experience will be especially sought after by the mid-market segment.

"When a business owner is considering the most important business decision of her life, whether that's to sell a business, to recapitalize a business, to buy a business or to merge a business, they need a tremendous amount of guidance, practical advice and emotional support," Gregory said.

Although larger firms have more staff and a larger network of contacts, Mosaic is one of the few that can offer consultation directly with the most senior members, the team believes.

"This firm has the culture to relate and understand the problems that an entrepreneur of a middle size company has and the challenges he has," said Cohn. "We're not a bunch of stiffs in suits to go out and try to convince somebody we have the largest database in the world. The only way you'll be successful is by understanding the client and weighing the personal issues with the same degree of intensity as the financial issues. It's about people changing their lives."