Gina Cocking was recently appointed CEO of Colonnade Advisors, a boutique mergers and acquisitions investment bank with expertise in the automotive F&I industry. Cocking has a storied professional background that includes high-profile positions in investment banking and as chief financial officer (CFO) at major financial institutions. Cocking served as vice president at Colonnade from 1999 to 2003. She returned to the company in 2014 with CFO experience.
I think a recognition as being one of the most influential women in middle market is a platform I can use to connect with women, especially analysts and associates.
Her many awards include recent inclusion to the 2020 Most Influential Women in Mid-Market M&A.
Cocking recently spoke to us about her career, the pandemic’s impact on her company and the industry and the paths women can follow into careers such as hers.
Q: I see you have an undergraduate degree in economics from the University of Chicago. They are, of course, second to none especially in economics education. I have to ask why you decided to pursue an MBA rather than a doctorate in economics?
Well, that’s a great question. I originally wanted to be a lawyer because growing up, the professionals I knew were either doctors or lawyers. But, as I went through university, I discovered that I enjoyed the study of economics. I thought about pursuing a Ph.D., but it is a lot of research and I wanted a career where I’d work more directly with people.
After graduation, I thought I would work in investment banking for a few years and then go on to law school. I found that I loved investment banking. I enjoy the pace, the analytics and the opportunity to interact on a day-to-day basis with people who are at the top of their game. I was in my 20s and working with intense, brilliant executives, meeting CFOs and CEOs at major companies. It was exhilarating. I returned to school to get my MBA and then continued in the field.
Q: I’m sure you have a million, but I’d love to hear some of the highlights of your investment banking career, which you really enjoyed, something of which you’re especially proud.
I worked with J.P. Morgan & Co. in equity capital markets, where I advised companies on public equity issuances, such as IPOs. As my prior experience included investment banking for the insurance industry at Kidder Peabody, I was staffed on a number of multinational insurance deals that sent me to Europe. That was an incredible opportunity.
Q: Were there downsides?
Yes, lots of travel during that period. It felt like I was getting three hours of sleep a night, but it was exciting.
Q: What took you to Colonnade?
I was employee Number One back in 1999. The founder of Colonnade and I worked together at J.P. Morgan. I enjoyed it but had to leave after four years. I never thought I would have the opportunity to return to the industry. Coming back to Colonnade was a dream come true, and I’m grateful to my partners for it.
Q: What are the best parts of working at Colonnade?
I enjoy working with middle market clients and did not often have that opportunity at J.P. Morgan. In working with large corporations, I dealt with incredibly talented people, but the transaction was just another aspect to their job. When I work with middle market companies, the executives are the business owners and founders and the transaction is transformational. We help create generational wealth. Working with middle market clients is an absolutely deeply personal experience. There is a lot of emotion involved in these transactions. These deals are impactful, which I find professionally fulfilling.
In the early years, we focused on technology companies and over time, financial services and business services companies. I loved it but I was traveling a lot.
Q: What made you get off that track?
I had a young daughter and a husband and it became difficult to balance time with my family with my time on the road. I left the industry and became the CFO of several companies. I led those companies through capital raises and a sale process. It was intense but manageable because I was not traveling. At night I could put my daughter to bed and then pick up my work again.
Q: What do you see in business as we move through this pandemic?
This week, most companies are trying to make sense of it all and protect their employees and the long-term viability of their business. But there are some pockets that are flat and even some that are flourishing. In the states that are not under lockdown, dealerships are still selling cars. Direct-to-consumer financial product sales are strong, which does not surprise me. The direct-to-consumer vehicle service contract industry largely grew out of the recession.
Over the past five years, we have encountered a number of company founders that had been in business through the recession and decided to diversify their personal balance sheet by selling their company. These decisions coincided with a period of the largest private equity capital raising that we’ve ever seen.
At the beginning of 2020, there was $1.5 trillion in undeployed capital, aka “dry powder” to be invested, the highest level in history. Additionally, credit became easier and cheaper. These financial trends fueled M&A volume.
Today, the capital is still there to be deployed. For quality companies, it may still be a good time to be a seller. However, if we find ourselves in a protracted recession, capital could retreat.
Q: What do you see for F&I?
Companies grow either organically or through acquisitions. The F&I industry has seen a number of platform investments by private equity firms. Private equity firms need growth and organic growth may not be as simple over the next year as it was over the past few years. This may fuel more M&A in the industry.
Valuations in the F&I industry were high in 2019 and will be scrutinized in the coming period. There will be a lot of analysis on how companies performed during the crisis. However, I do not think that valuations should be cut just because sales are down. Everything has been down during this novel crisis. Buyers should benchmark: how did company A do compared to company B? How did the company do during the last recession?
There is still capital available and interested buyers. I’m keeping an eye on the M&A market trends.
Q: What does this pandemic mean for your company?
The most immediate impact has been to curtail travel, which has the upside of more productive hours during the work week. Instead of face-to-face meetings, we are picking up the phone. We are using this time to not only service our existing clients, but to research and study the industries we cover.
Colonnade will remain strong. The Company was founded 21 years ago and it will be around for 20-plus years more. We value our role as a trusted advisor to our clients and we build long term relationships. Unlike other investment banks, we have remained steadfast in our focus on financial services and business services. We have been covering F&I and insurance premium finance sectors for over a decade. We call on companies and develop a relationship and will be there when the owner decides to transact in the future. We are using this time in quarantine to check-in with companies. The work we are doing now will pay dividends three, five, 10 years out.
Q: What else have you done to move the company ahead?
Over the past five years, we’ve built our knowledge base in auto F&I. When industry players think of mergers and acquisitions, they often think of Colonnade, which is a huge compliment. We have been involved in the majority of the recent transactions in the space, either on the buy-side or the sell-side. That gives us a unique position because we have a good view, an insider’s view, on how these companies should perform. We are able to benchmark and interpret the data. Our experience also allows us to say, ‘We keep seeing these types of questions coming up over the last year, so we need to prepare for this issue.’ In addition to our engagements, we spend a lot of time talking to private equity firms about trends in the industry. This helps us stay close to the potential buyers of F&I companies.
As I mentioned earlier, we get to know companies before they are ready to transact. We have recently increased our engagement with companies on how to maximize shareholder value over the long term before they are ready to hire an investment bank. Our advice is both general and industry specific, drawing on Colonnade’s 21 years of history. We have increased our outreach in our targeted industries through podcasts, blog posts, articles, roundtable breakfasts, and speaking engagements.
We are using this quarantine time to continue to develop deep knowledge in the industries we cover.
Q: So, work hasn’t lessened?
No, we are busy.
We have a number of deals that are going swimmingly. In fact, we just signed a new client last week. Potential sellers are assessing their businesses and realizing that they will get through this. Thus, it is a good time to get ready for a sale and evaluate how and when to go to market after the crisis.
We have changed our internal processes. We try to keep bureaucracy to a minimum but found that under quarantine orders, we needed to connect company-wide daily. Originally, we did conference calls, but we transitioned to Zoom meetings to continue the personal connection. Even our Friday cocktails have moved to a virtual venue.
Q: Technology has certainly changed our culture.
Technology has enabled boutique mergers and acquisitions firms like ours to flourish.
The human capital needed to transact on a deal is less than was necessary 20 years ago.
By the same token, it has enabled more private equity firms to come into existence, which has significantly impacted Colonnade. There are more buyers for companies. For example, 20 years ago, when we were marketing a company for sale, we would spend a lot of time trying to get the attention of private equity firms. Now, the private equity firms reach out to us to see more of our deal flow.
As we’ve spoken, I’ve seen emails from three different private equity firms.
Q: Why do you believe so few women are in positions such as yours?
Industry-wide, an estimated one in four analyst positions and only 17% of senior leadership roles are filled by women. Investment banking is a tough industry because it is so intense. When we walk into a meeting, the client expects us to be as intelligent or more so about their business than they are. It takes a lot of effort to prepare. You need to get really smart, very quickly, which means a lot of hours in a condensed period. Additionally, the business involves significant travel, which makes it difficult for investment bankers with children, especially dual-earning families. I believe that the time commitment is one of the biggest challenges for women.
One of the things that I have said to women’s groups that I’ve talked to is that the best advice I can give to women starting their career is to “marry well.” I’m not saying to find a wealthy partner but, to find one is going to support your career. I have been incredibly lucky. My husband is amazing. He has always been my partner and just as involved in our daughter’s life.
By human nature, it’s easier for people to connect with those like them: men generally connect more easily with men, women connect more easily with women. Leadership in investment banks is largely male. Investment banks are cognizant of the potential unintended bias and are working to make the industry more open and appealing to women. However, there are still challenges from unexpected quarters. We had a college intern who was recruited the next summer to intern with Goldman Sachs. She was at a top university with close to a 4.0. Her male classmates said to her that she only got the job because she is a female. I was shocked. That is what I heard 28 years ago. When you walk into a place of work and your colleagues look at you like you did not get in because of merit, it can be hard to assimilate.
I think a recognition as being one of the most influential women in middle market is a platform I can use to connect with women, especially analysts and associates. I can demonstrate that there is a path you can take in investment banking.
Keep at it.