New Quarters, New Approach at Tucker Capital

U.S.-1 Newspaper by Diccon Hyatt

Craig Battle could see the direction his life was heading, and he didn’t like it one bit. It was 1982, and Battle was a young, successful investment banker for a major Wall Street firm. But that success came with a heavy price.

“I was always on airplanes, and I rarely saw my two sons, who lived here in Princeton,” Battle says. “I was young. I had a good trajectory going, but I didn’t have much of a home life.”

If Battle was going to have a more balanced life — where he could do well in business and yet catch his sons’ soccer games — he would have to forge his own path. And that’s exactly what he did when he founded the investment banking firm Tucker Capital in a tiny office on Nassau Street. “I went from a corner office overlooking the East River to an office above a dress shop,” he says.

Founding Tucker Capital was a leap of faith that paid off. Today, Battle is guiding the next generation of partners — his son Morgan along with his niece and a family friend — as they try to leverage the company’s legacy and carry Tucker Capital into the future. The company, which has re-imagined itself several times over the years, is no startup, but it looks like one in some ways. It recently moved from staid quarters at 234 Nassau Street above Redding’s Plumbing to Tigerlabs at 252 Nassau, a startup incubator where people sometimes leave Razor Ripstik skateboards in the middle of the floor.

Many of Tucker Capital’s clients nowadays are young companies in the educational software field, so Battle believes it makes sense for Tucker to work alongside other startups, despite it being a somewhat unconventional office for an investment bank. But Tucker Capital has been a different kind of company from the beginning. Part of what drove Battle from Wall Street was the winner-take-all culture.

“I couldn’t stand the ethics and morals and bad behavior I saw in New York,” Battle recalls. “I saw people misbehaving on business trips, backtstabbing. It was a free-for-all, with everybody looking to feather their own nests; they had no loyalty to their own colleagues.” 

Battle had a hard time imagining climbing the corporate ladder in such an environment, even though he was doing well as a senior vice president. “I’m not the Wolf of Wall Street. I would have been eaten by the Wolf of Wall Street. I was not threatening to people, because I was a good guy and I was doing my own work and I wasn’t trying to politically maneuver. My guess is that as I got farther up the food chain, I might not have been successful. I think the guys at the top of these firms have to play the game, and I didn’t want to play that game.”

The Game-of-Thrones-like atmosphere at the big financial firms went against Battle’s upbringing. Battle grew up in Princeton, the son of Hyman Battle, a lawyer at the New York law firm of Battle Fowler, Stokes & Kheel. The elder Battle had a reputation for scrupulous behavior. When Craig went to his father’s funeral in 2002, the late lawyer’s colleagues regaled Craig with tales of Hyman’s upstanding nature. “They would say, ‘oh, you know, he always did the right thing. He wouldn’t take a bonus when we got bonuses, because he was the guy who decided on the bonuses.’ Dad went to kind of an extreme. I took a modified version of that. I think you have to take care of yourself in an honorable way,” Craig says.

Battle went to college at St. Lawrence University, graduating in 1970. When he was a freshman in college, he ran into Anne Morgan on Nassau Street. The Morgan and Battle families went way back, so it came as no surprise when the two began dating. “After our first date, I went home to my mom, and said, ‘I went out with Craig Battle, and guess what, I’m going to marry him,’” Anne recalls. “Four years later, we got married.”

Battle completed the University of Pennsylvania’s Wharton Management Program. After college he went to work at a commercial bank in Philadelphia in 1974, but soon had the opportunity to move into investment banking. He moved back to Princeton in 1976 to become the first associate hired by William Sword Sr., who founded Wm Sword & Co., an investment banking company, after leaving Morgan Stanley. (Sword Sr. was Hyman’s classmate at Princeton.)

When Battle left Wall Street in 1982, he teamed up with a young lawyer named Peter McCausland to found Tucker Capital Corp. McCausland worked from Philadelphia, and Battle worked from a small office on Vandeventer Avenue, later moving to the humble dress shop office. McCausland handled legal work, and Battle did most of the investment banking work. The company specialized in serving medium-sized companies overlooked by Wall Street firms, handling mergers, acquisitions, and strategic advisory work.

But the partnership wasn’t to last. McCausland’s separately owned company, Airgas, began to take off, and Battle bought McCausland out of Tucker. (Airgas today is an S&P 500 company with more than $4.7 billion a year in revenue.) In the mid-’80s, two new partners came on board: David Baxendale and Craig’s brother, Kemp Battle. “That was when we really began to build the company,” Battle says. “We had a great ride.”

The three partners formed a company that was quite different from the buttoned-up corporate raiders of the New York financial culture. “When I came here, the goal was to put together a group of people that would have fun together, not take themselves too seriously, and work really hard,” Battle says. It seems to have worked. “In our 28 years together, we never had a cross word and never had any problems. A couple of times we had to figure out how we were going to split things up, and in the end, we said it would be one third, one third, one third across the board.”

The company found a niche doing merger and acquisition work for medium-sized public companies: for sellers, they helped value businesses, evaluated the market, and ran the sale process. For buyers, they identified target companies, established relationships with them, evaluated businesses, and negotiated closings. They also sold private companies and did strategic advisory work for businesses and nonprofits.

“The ’80s was a crazy time,” Battle says. “There were a lot of leveraged buyouts. We worked with a lot of companies spinning off their divisions and buying divisions. But we were doing it in different industries. We were doing breweries, transportation specialty companies, chemical companies, you name it.”

The business was rewarding, but it could be stressful. At one point, Tucker was hired by the management of a calcium carbide plant in Iowa. The managers wanted to buy the plant from the parent company. Battle devised a Byzantine financing scheme that used tax-free bonds, industrial revenue bonds, and many other moving parts. “It was one of the most complicated deals we could imagine,” Battle says. “We took it back to the parent company, and they were in a big hurry. They said, ‘You have got to do this in 45 days.’ I said, ‘That’s not possible, but we’ll try.’” Tucker managed to arrange the deal, and New Year’s Eve found Battle, the parent company, and a CEO representing his client sweating it out in a conference room where the paperwork was to be signed.

As midnight neared, one of the CEOs suddenly took Battle into a side room. He told Battle that they had used all the money in their bank account to make the acquisition and by the way, they had nothing left over to pay him with. Battle was shocked. “This was the first really big deal we’d done,” Battle says. “We had done our best work, and we had structured a brilliant deal, and now my client is telling me he’s not gonna pay me, on New Year’s Eve. Everyone else is out drinking.” Battle made a handshake deal with the client that they would pay him in five installments over the next four months. Amazingly, the client kept its side of the unwritten bargain.

It didn’t always end so well. Later Battle orchestrated the $100 million sale of a steel mill. Battle and the sellers were once again seated around a conference room table ready to close the deal. But this time, the buyer was nowhere to be found. Eventually, Battle got him on the phone, and the client told him the price of steel had just dropped 60 percent over the last 36 hours, and not only was the deal off, but he was bankrupt. All of his assets were in steel, and all of his loans for the deal had used those now-worthless steel assets as collateral. The banks had called in the loans, and the deal imploded. “He went bankrupt at closing,” Battle says. “I don’t know anybody who can tell a story where the buyer went bankrupt as they were trying to close a deal.”

That was a case of bad luck, but other times, the cutthroat tactics Battle had avoided came back to bite him and his firm. Battle remembers one deal, worth some $150 million, where Battle was hired by a large public company to buy a smaller company. The seller accepted Battle’s full-price offer, only to tell him, 10 days later, that they had “good news and bad news.” The bad news was that they had decided to change their mind and not accept the offer. The good news was that the seller had found a better offer from another company. Tucker capital was out of the picture. “The fact that they would say that was good news — who says that?” Battle says. “That was a long time ago, but as you can read in the news, Wall Street hasn’t changed a whole lot since then.”

All of that wheeling and dealing was working, but Battle realized that the company wasn’t going to survive if they continued being generalists. They were competing against bigger investment banking companies who could sometimes offer more than Tucker could. To thrive, Tucker would have to specialize even more. In the late 1980s, just as Battle was realizing this, Tucker was approached by Torstar, the Canadian owner of the Toronto Star. The company had expertise in the catalog business and was thinking of expanding into the American market.

Leading a company’s expansion into the catalog market could have helped Tucker establish itself in that industry, not to mention make a lot of money. Battle began researching the marketplace. But the more he looked at the data, the more he realized buying American catalog companies would be a bad deal for Torstar. He told them as much, and in doing so missed the short-term opportunity to orchestrate acquisitions.

“This is sort of a hallmark of our business success, telling people the truth,” Battle says. “That’s not always the case where I worked in New York.”

During the course of doing research for Torstar in the late 1980s, Battle saw that the consumer catalog industry was exploding, and there was no investment bank serving that market. Tucker Capital formed a joint partnership with Jim Alexander, an expert in the catalog industry, to form Tucker Alexander. Over the next 25 years Tucker became one of the top investment banks serving the consumer catalog industry.

Among Battle’s new clients was Torstar, who had been impressed by the company’s honesty in throwing cold water on their expansion idea. Tucker found the company a new niche: the educational publishing business, making all kinds of teachers’ materials other than textbooks. Over the years, Tucker helped Torstar put together a $350 million educational materials publishing division that was later sold off when it began to face competition. That project got Tucker’s foot into the door in the education sector. Torstar kept Tucker on retainer for 19 years. Another client in that field, National Geographic, kept Tucker Capital on retainer for 21 years doing similar work, a relationship that just ended after NatGeo also sold its educational publishing division.

That business model rolled along until about 2009. The Battle brothers and Baxendale were all nearing retirement age and were thinking about doing other things. Tucker Capital had provided Battle with a good career, and he had been able to attend every one of his sons’ sports games. Baxendale and Kemp Battle both decided it was time to move on to other things, and Craig was leaning in the same direction. But Craig’s son, Morgan, his niece, Celina Morgan-Standard, and one of their friends, Taylor Smith, had other ideas.

“They said, you’ve got almost a 30-year track record, let us take it from here,” Battle says. “My partners left, and I decided to stay to mentor them, my son in particular. They took over the company and they have taken it in quite an exciting direction.” The other partners are still around but have stepped back from an active role. The new Tucker Capital has a somewhat different way of doing things.

The old business model was to rely on income from consulting services and from doing transactions with established companies. The new Tucker Capital still does this work to bring in income, but its long-term planning is focused on helping startups in exchange for royalties if the company is successful. Most of its clients are in the education software business, in order to leverage Tucker’s connections in the education business.

Tucker recently did in-depth strategic advisory work for American Prison Data Systems, a company that has developed a tablet computer for use in the prison system that has limited Internet access, but is pre-loaded with educational activities for inmates. Tucker developed the company’s business model and structured partnership arrangements in exchange for a combination of retainer fees and future royalties.

They are also working with a startup company called Mazin in Jackson Hole, Wyoming. The company was founded by a researcher who uses predictive analytics on data collected on students, in hopes of identifying kids whose behavioral patterns indicate potential dropouts, self-harm, or other negative outcomes. Tucker arranged a partnership between Mazin and a San Francisco-based technology company that already had a software platform that is used in K-12 schools around the country. Rather than develop its own network, Mazin’s technology is being incorporated into the other company’s platform.

Another client is Dexler, a Bangalore, India-based corporate training software company.

Morgan Battle says he believed his father’s company was worth continuing because of its strong brand. “Tucker Capital has an incredible reputation in the markets they served,” Battle says. “We felt new blood being infused to the business could revitalize their presence in the consumer retail and education markets. There was something to build off of.”

With the new blood on board, Tucker has taken an unconventional approach to business problems on behalf of its clients. Recently Battelle Education hired Tucker to help build a software portal to allow educators to track student achievement data to see which educational technologies were doing students the most good. In researching the problem, Tucker discovered that many other groups were already researching this, and that Tucker and Battelle were late to the party.

Kemp Battle told his nephew Morgan flat-out that they didn’t know enough about the data or the marketplace to make a good recommendation. So Tucker Capital did something that made sense for the problem at hand, but which is a bit unconventional in the investment banking world — it organized a conference of all the different companies and organizations that were trying to build education software portals, some of whom had written extensive white papers on the topic. Last October 100 people gathered at the old National Geographic headquarters in Washington, D.C., to hash out the best ways of building such a portal.

“That’s not the classical transactional business that most people think of when they think of investment banking,” Morgan says. “That’s what makes us a bit different. It was a strategic advisory assignment, and we put together a conference.”

Morgan Battle says moving to Tigerlabs last May has helped fuel that think-outside-the-box energy. “Since we work with clients from the ground up, we needed to live and breathe it and be around it on a daily basis,” he says. “We need to be able to walk the walk of the entrepreneur.”

Morgan’s story echoes that of his father. After graduating from Lafayette College in 2001, Morgan went to work in New York for Fox Sports, negotiating media and advertising deals. He and Celina Standard (a graduate of the Franklin College of Switzerland, with an MBA from the University of Hawaii) moved to Tucker Capital when they saw the opportunity to revitalize the business in 2008. Taylor Smith came on board in 2010 after a career in finance that has included working for the Carlyle Group, Morgan Stanley, and his own company, the Spirus Group. Smith is the son of some of Battle’s friends, and often dined at the Battles when he was a student at Princeton.

Morgan Battle hopes working at Tucker will allow him to have a relationship with his own two children similar to the one his father had with him. Since joining the company, he has come to understand his father in ways he never did before. “When my dad came home from work, I never sensed the anxieties that were piling up on him while he was at work,” Morgan says. “I feel them now, too, and anyone who builds a business will feel it. I deeply respect that he kept us separate from it, and it’s a model of how I want to be with my own kid. When I came to Tucker, I saw him in the trenches. It was a window into his business life that I never would have gotten if I hadn’t joined the company.”

Craig’s wife, Anne, has also been a part of the success of Tucker Capital by supporting her husband and son through the years. “She’s been our biggest champion,” Morgan says. Anne founded the Family Born Center for Birth and Women’s Health in the 1980s. The center delivered more than 1,500 babies before it closed in 1995 after hospitals adopted many of the family-friendly practices that had made the birthing center popular. The Family Born building then became home to Hi-TOPS, a nonprofit group that provides sexuality education services for teenagers. “She’s the true entrepreneur in the family,” Craig Battle says.

For all of Tucker’s success, Craig Battle counts his family life as his biggest accomplishment. “It is possible to be successful, work hard, have a great track record, and still have a home life. That’s the thing I’m most proud of,” he says.

Tucker Capital Corp., 252 Nassau Street, Princeton 08542; 609-924-5710

www.tuckercapital.com.