Banker By The Hour
Article originally appeared in Forbes Magazine, issue of Sept. 2, 1991
WALL STREET's reputation for greed makes good marketing for Gordon Tunstall. A financier who targets his services at smaller companies, Tunstall has raised nearly $1 billion in debt and equity so far this year for 75 clients.
While most investment banks take underwriting discounts of up to 5% and bill multimillion-dollar "financial advisory" fees, Tunstall Consulting, Inc. charges hourly fees of $90 to $315, plus expenses. Thus Tunstall claim to lack any incentive to hype a deal in order to collect a bigger commission, although he does of course have an incentive to work (and bill) long hours.
Some of his customers speak very highly of him. Take American Buildings Co., a Eufaula, Ala.-based maker of prefabricated metal structures (1990 sales, $140 million). The company hired Tunstall in 1989 to lighten $90 million in debt piled on in a 1986 leveraged buyout financed by Kelso & Co. and PaineWebber. Roger Pitts, American Buildings' chief financial officer, says he wishes he had known Tunstall at the time of the buyout. "The investment bankers forced as high a sales price as they thought the company could stand," says Pritts. "If we'd had [Tunstall] around, we would not have paid as much for the company."
A former Coopers & Lybrand accountant, bank vice president and chief financial officer of an oil company, Tunstall, 47, founded his firm in Tampa in 1980. Without committing any of his firm's capital to underwritings, he has built a business that will earn $5 million this year. Says Michael Mears, who runs a $600 million private-placement portfolio at General Electric Investment Corp.: "The whole Tunstall concept is a breath of fresh air. He's not pawning off a good or bad deal and grabbing a fee and running. He's as close as one can get to the oxymoron 'honest broker."