After months of speculation, fast-talking dealmaker Quincy Smith has announced plans for CODE Advisors, a new type of investment bank that will combine traditional transactions with a heavy dose of advice. The new advisory firm has been highly anticipated since Smith announced he was stepping down as president of CBS Interactive (CBS) last fall. None less than CEO Leslie Moonves himself announced at the time that his company would be Smith’s first client. But CODE advisors is much more than just a bet on Smith’s jumbo Rolodex. His coming out is a sign that some smart dealmakers believe we’re months away from a thawing of the IPO market. He plans to be at the center of the action.
In truth, there’s not too much that’s new about this model: Smith compares CODE to a small group of boutique investment banks from the mid1990s that offered advice as well as help with transactions. Many of these were acquired by the large banks in the past decade. “Technology’s moving faster than ever and there’s more of a need for media to speak technology,” Smith explained when he stopped through Fortune’s offices this week, yet they have less help than they once did from traditional dealmakers.
Few people are better positioned than Smith and his two cofounders, Fred Davis and Michael Marquez, to help large media companies embrace the disruptive technologies that are reshaping their businesses. At CBS, Smith was behind the company’s $1.8 billion acquisition of CNet Networks in 2008. Before that, he put in time at the prestigious investment bank Allen & Co where he worked on notable deals like the del.icio.us sale to Yahoo (YHOO) and Advertising.com’s sale to AOL (AOL). Early on, Smith spent five years at Netscape and was a founding partner at The Barksdale Group.
Marquez and Davis provide a strategic balance in their backgrounds. A former music executive with EMI, Davis previously ran an outfit that advises new media companies like MySpace, YouTube and Hulu on how to establish new business models for music, film and tv shows on the web. Marquez, who cut his teeth in banking, worked closely with Smith at CBS Interactive as the head of corporate and business development. Before that, he worked in a similar role at Yahoo.
In short, these guys know nearly everyone responsible for making decisions about how disruptive new technologies should reshape the business of entertainment. And they have a very strong point of view about what types of new business models will help the big media companies in particular create new revenue streams without cannibalizing their existing businesses. As an example of success, Davis held up Vevo, the Hulu-like music video site owned by Universal Music Group, Sony Music Entertainment and Abu Dhabi Media Company and served by YouTube.
Cable company Comcast (CCS) and European music startup Spotify have already signed on as clients. From here, CODE Advisors will now have to make good on the founders’ credentials, and Smith knows it. “The Code network will always be greater than Code,” he says, then recites a familiar axiom in the business: “You’re only as important as the last deal you gave them.”