Morgan Stanley Buys Trading Platform EquityZen

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00:00How important is this? I mean, especially at a time when there are fewer and fewer public assets

00:07for investors to buy. Well, first off, welcome to the CEO Dealmaking Club to Ted Pick. It is a deal

00:12where no real price has been announced. They haven't disclosed the terms of the deal. So fair

00:16to say it's probably a sub $500 million deal. So it is a bit of a nibble for Morgan Stanley. This

00:21is not the main cause. This is not the real deals that they want to bounce on. But it is strategically

00:26very important. When you look back at James Gorman's tenure at Morgan Stanley, that was

00:31bookended by two massive deal sprees. The first one right before he became CEO, Smith Barney

00:36really launched the big Morgan Stanley wealth management juggernaut. And towards the end,

00:41the E-Trade and Eaton Man's deal. But the deal that often does not get talked about, but is

00:46extremely important inside Morgan Stanley was the Solium deal. It was a stock plan administrator

00:52for private companies, for companies, where Morgan Stanley would go and make it their workplace

00:57channel to find employees who were getting these equity stock-based comp, bring them into

01:02their ecosystem. Similarly, you can look at the strategic importance of the deal. Do not look

01:07for the value and the size of the deal, but what it could do for Morgan Stanley in terms of

01:11entrenching itself in the private markets ecosystem, as you rightly pointed out, at a time when more

01:18and more companies are choosing to stay private for much longer. A lot of the deal making and a lot of

01:24the transactions are happening in their early stage before they hit the public markets. And that's

01:29where the banks have to find ways to make money. Facilitate some of these transactions. At the same

01:34time, also find people who can come into the Morgan Stanley system. A lot of the employees who want to

01:39trade on a marketplace like Equity Zen will suddenly come into a lot of money. They need to invest that

01:44money. And that's where Morgan Stanley will show up with other arms of its business and say, you will

01:50stay within the Morgan Stanley sandpit. That's the goal here.

01:53I would say, how much of this is just indicative of where wealth management, I guess for Morgan

01:58Stanley, but at all the banks is going, that they realize that they need offerings that look like

02:02something like private capital, whether it's bringing in this deal specifically with Equity Zen or just

02:08having their own private capital offering?

02:10Because you also have to see the read through. Once you build these relationships with private

02:15companies at the early stage, you're also talking about follow through activity in the

02:18investment banking pipeline. So it's the wealth management business that can also bring you a

02:22lot more investment banking business. And the wealth management business is a place where you're keen to

02:27grow assets. Investors are awarding consistent fee based revenue making, and that comes from the

02:32wealth management business. So yes, it is extremely important. You can see that Jetfin, this head of the

02:37wealth management business at Morgan Stanley is the one talking about this deal. And also down the road,

02:42several years later, perhaps, but down the road, a possible CEO contender at Morgan Stanley because

02:47he's running a very important division.