Dream firm busy doing deals in Baltimore

THE BALTIMORE SUN

IN A CRAMPED, stuffy office on East Redwood Street, Owen May and Kevin Davis are creating their version of the American Dream.

They've pooled their life savings to build an investment banking firm from scratch.

In the past 12 months, May Davis Group Inc. has taken three companies public, opened a brokerage arm in New York's World Trade Center and hired 53 employees, including brokers, researchers and support staff.

Make no mistake, May Davis isn't yet in a league with next-door neighbor Alex. Brown Inc., which has taken public such high-profile companies as Starbucks, America Online, Sylvan Learning Systems and Outback Steakhouse. This year, the average Alex. Brown deal is $48 million.

May Davis is a small operation, inching along by bringing start-up companies to the market. These companies pose plenty of risk to investors, but, like any stock, they could be the winners of the future.

Last month, the firm raised $4.2 million for Florida-based Apollo International of Delaware Inc., which makes electric motor relays and switching devices that protect large power generators and motors from being damaged by power surges.

Its shares have risen to the $6 range, after coming out at $5 in the initial offering.

In March, the firm raised $3.1 million for Hong Kong-based Euro Tech Holdings Co., a distributor of equipment that tests and disinfects water and wastewater.

Its primary market is Hong Kong and China. Euro Tech's shares are trading in the $7 range, up $2 from the offering price.

The deals came several months after May Davis raised $5.3 million a year ago for NetLive Communications Inc., its first transaction.

The New York-based technology company, which is trading in the $5.60-a-share range, is developing computer software so people on the Internet can see and talk to one another.

The firm is targeting large "call centers" where Internet users can have one-on-one conversations with sales representatives who work for, say, a mutual fund company or a mail-order clothing store.

"I think May Davis has done an extremely good job supporting the stock," said Jeff Wolf, a NetLive founder and director. "During crunch time in an IPO, it is always very intense. There were no surprises. It is a good, small investment bank."

May Davis is one of a few African-American-owned investment banking firms putting together deals, said Ron Scott, who brought May Davis the NetLive deal and is co-founder of New York-based Tiger Financial LLC.

"I just think this is the beginning of a couple of minority firms taking companies public," he said. "They have done three deals, and that is a very small piece of business. But I think they are going in the right direction."

May, who is 38, and Davis, 39, met at the University of Miami and became friends. After graduating in 1980, May earned a master's in business at Duke University and Davis enrolled in graduate school at North Carolina Central.

May landed a job at Shearson Lehman Bros. in New York, and he talked with Davis about the money that could be made in the brokerage business.

Davis left graduate school to join a brokerage firm in Colorado, and by 1990, he was with Chapman Co., a Baltimore-based brokerage firm where he became head of institutional equity sales.

While at Chapman, Davis approached May about starting their own brokerage firm. "I realized there was an opportunity for minority firms," he said. "I kept prodding."

Around Christmas 1992, the two met at May's Upper East Side apartment in New York during a long weekend and hashed out plans to form May Davis. More than two years later, May Davis opened for business after raising $1 million from a handful of investors.

"We both kicked in our entire life savings," Davis said.

The two expect to put together at least one more deal this year, and they plan to tap into larger transactions that are syndicated among other firms.

"Over time, each deal becomes easier to do and each one is a little more sophisticated in terms of the companies we are dealing with," Davis said.

But building the firm from scratch hasn't been easy.

"I'm always working," Davis said. "In my sleep I'm working. I expect to have a heart attack any day. The stress is unbelievable."

Pub Date: 8/11/97

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