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Banner Biz QandA

Banner Biz QandA

Ronald L. Walker II is president and founding partner of Next Street, a merchant bank started to serve high-performing, high-potential inner city small businesses and entrepreneurs across the United States. Before Next Street, Walker was executive vice president and regional executive of retail banking for Sovereign Bank in Greater Boston.

Before joining Sovereign in 2000, Walker held several senior-executive roles in commercial and retail banking. From 1990 to 2000, at Fleet Financial Group, he was senior vice president, retail market manager and senior vice president of northern New England’s Business Banking Group.

A graduate of Prairie View AandM University of Texas with a B.A. degree in marketing and finance, Walker serves as chair of the board of the Roxbury Comprehensive Health Center and as vice chair of the Crispus Attucks Children’s Center in Roxbury.

Q: What is a merchant bank?

A: The merchant bank is a classic, time-honored business model that has given birth to and nurtured some of the world’s most powerful financial institutions and businesses. The foundation of its success has been the capacity and willingness to be nimble and creative, and to take risks in order to serve its clients. Traditionally, the merchant bank has served as a deeply trusted advisor for its clients, blending sound advice with appropriate finance. Merchant banks, including Hambros, Lazard and Rothschild, have historically been closely intertwined with their clients, supporting their growth and growing with them, adding businesses and services over time to address client needs.

Q: Merchant banks are no longer in fashion.  Why do you think this form will be helpful to small- and medium-sized companies?

A: Much of modern banking has become transactional and formulaic and that’s part of the problem. This market, in particular, requires the tandem assets of advice and financing that enables them to make key decisions and guide their businesses toward growth. The two guiding elements of our business model — flexibility and trust — render Next Street a good match for the needs of today’s promising small businesses in urban markets.    

Q: Merchant banks once served the super rich. How can the merchant bank model be sufficiently profitable when the clients are firms with modest sales and profits?

A: Next Street’s business model and our approach to serving our clients is built around long-term relationships. As our clients redefine the way they do business, expand their business lines and achieve significant growth and development, we believe these partnerships will result in long-term success for both parties.

Q: Your services are similar to those offered by management consultants such as McKinsey and Company and the Boston Consulting Group. Are there plans to specialize in specific industries?

A: The traditional merchant banks were never industry-focused, but rather adapted their business model to reflect their intertwined client relationships. The merchant bank’s inherent versatility and willingness to change with their clients was – and continues to be — invaluable. Next Street’s merchant-bank model is specifically structured to address this issue of growing needs and emerging challenges across industry segments.

More specifically, we are not consultants: we holistically serve our clients’ needs and have developed a range of advisory services that are tailored for this market. It’s truly an innovation in merchant banking. Next Street has formalized and integrated this function by recruiting staff with expertise in finance, strategic consulting, and long-term relationship management. This blend of sound advice and long-term relationships is a core part of the implementation, ultimately helping achieve results and reducing risk.

Q: Some firms like Bain Capital invest in companies and serve as underwriters. Is this a future direction for Next Street?

A: Next Street was founded and built around the premise of providing two things to our clients:  high-quality advisory services and access to customized financing and capital solutions. Although not all client financing needs will be underwritten by Next Street, we believe providing sound advice and access to the “right capital” is core to our trusted advisor business model. In many instances, Next Street will leverage a mix of public and private financing to develop the optimal capital solution for our clients.

Q: How will Next Street Capital work?

A: Next Street Capital focuses on addressing the capital gap that exists in the small business market.  For our clients, that could mean providing acquisition capital to expand into a new site, or combining public and private sources of funding in order to provide growth capital for businesses. The capital solutions are highly customized to the direct needs of the business owners that we serve. In addition, part of Next Street Capital’s overall responsibilities will include launching investment vehicles, including our Next Street Opportunity Fund, where Next Street Capital would act as fund manager.

Q: Why did you establish your main office in Roxbury?

A: Next Street has built the business model around thriving urban small- and medium-sized businesses. From the very beginning, we believed we needed to be different than traditional commercial banks and service providers; our location is one core component to our differentiated model. When business owners visit our office in Dudley Square, the geographic center of Boston, they are encouraged that we have established a business in the community focused on serving businesses from the communities.