Pat Shepherd is senior managing partner for Avondale Partners, a Nashville-based independent investment banking firm. Shepherd serves as general counsel for the company he helped found in 2001, while also overseeing its administration.

Recently, Nashville Post correspondent William Williams chatted with Shepherd about the company, which garnered headlines recently when it announced it will launch a Private Client Group and has hired investment managers John Glennon and Steve Glasgow for that effort. The two men had been with the Stanford Group, the financial holding company that is, along with founder Robert Allen Stanford, accused of an $8 billion fraud. Neither Glasgow nor Glennon has been implicated.

How long had the Private Client Group been in planning and why launch it now?

We had looked at the private client end of the business for several years because there are some natural synergies with Avondale’s original platform, which focused on research, institutional sales and trading and investment banking. That platform means we spend a lot of time with senior-level executives and entrepreneurs. Without a private client function, Avondale had limited tools with which to serve the personal needs of those individuals and their families.

The Private Client Group also allows us to offer additional products into the corporate setting, like retirement plan services. We [now] have the ability to provide a higher level of service to professionals who are often so focused on the growth of their businesses that they ignore their personal investment and planning needs.

Given the sluggish economy, is this the best time to be starting an investment venture?

The economy is certainly sluggish, but did that cause you to need more or less in the way of professional assistance with regard to your investment and wealth planning? We think this is exactly the time most professionals and executives need more assistance, not less. So yes, the time is right.

Among your core sectors of business services, consumer and industrial companies, health care and technology, media and telecommunications. How have those sectors done in the past year?

Since we are in Nashville, the health care space is always active. We expect that to continue for a number of reasons. Innovation, regulation and legislation all collide at the corner of health care and consumer. There has also been a large amount of activity in the business services sector. We look for that to continue as well. Outsourcing and consolidation are significant factors in this sector.

Obviously, the consumer and industrial spaces slowed noticeably in 2008. I think we have all seen that and both business and consumer spending were impacted by de-leveraging and slowing demand. The so-called stimulus plan has yet to do much stimulating.

Given those dynamics, how has Avondale performed during the recession?

2008 was certainly unchartered water and a big challenge. Nevertheless, we achieved record revenues. Our business mix differed from what we had anticipated with higher sales and trading revenues and somewhat lower investment banking fees than anticipated.

Certainly, the tight credit markets played a role, as did the failures of a number of investment banking and trading institutions, which had the effect of shaking the very foundations of our markets. Our futures group participated in the run up of commodity prices and trading that we saw in the spring and summer of last year as well.

Three years ago, Avondale formed an equity research office in Atlanta. What has happened with company growth since?

The research office in Atlanta was centered around a single analyst who relocated back home to Michigan in 2007. Consequently, we did not grow that effort. However, since that time we have added analysts to our offices in both Boston and Baltimore and opened new research offices in St. Louis and Kansas City.

We also continue to grow the Nashville home office as well. We now have a record (for Avondale) 14 research analysts covering about 150 companies.

Any plans for further expansion?

We are always looking to expand if there is a business case for doing so. Nashville is always our preferred location and it has become more and more attractive to people over the years. We are in a great place.

We will also look at talented people elsewhere if the people and the place fit our model. That is how we have come to have our other locations.

With this economy, what is your team’s main concern?

There has been a lot of talk about de-leveraging and risk reduction throughout the entire economy. However, it looks like what we have done so far is simply move some leverage and the attendant risk from the private sector to the public sector.

That has the effect of placing the debt burden on every taxpayer whether they want it or not. When leverage is in the private sector, investors can make a decision to accept or reject the related risks by buying or selling a company's stock. Public-sector debt and risk does not come with that investment option.

One argument suggests that leverage or debt and risk grew in the private sector because the people who took it on had the attitude that they would be gone when someone had to deal with it. It looks like our politicians have now adopted that view. That view was not good for the private sector, and there is no reason to assume it will be better for the public sector.