Apr 6, 2023 - Economy & Business

The relationship lesson in Raine Group's deal for Code Advisors

Illustration of a hanging bridge with the planks made of hundred dollar bills.

Illustration: Aïda Amer/Axios

"Don't burn bridges" might be the top takeaway from yesterday's news that The Raine Group has acquired Code Advisors, the tech and media M&A adviser whose repeat clients have included Spotify, Twitter and Vox Media.

The big picture: Code is the first acquisition in Raine's 14-year history, and reflects the New York-based firm's desire to deepen its Silicon Valley footprint, particularly in software.

Backstory: Code was formed in 2010 by Quincy Smith, Mike Marquez and Fred Davis.

  • Davis left four years later to join Raine, in part to focus more on music industry deals within a larger platform (he once was an EVP at EMI Records, and his dad is legendary producer Clive Davis).
  • It was a surprising split, but Davis kept in touch with his former colleagues and Code even worked alongside Raine on a few deals. About three years ago, Davis told Quincy Smith to begin paying attention to what was happening at Raine, which was expanding its media and entertainment business.
  • Smith did just that, and last year began a series of Embarcadero walk-and-talks with Raine partner John Salter. Raine then invited Smith to a firm offsite, after which the merger was effectively sealed.
  • "This was really masterminded by Fred years ago," Smith says. "If there was a deal cube here, he'd get it."

Zoom out: "We really don't have much overlap," says Salter, who explains that each firm tends to focus on a small number of core clients.

  • The merger also will help Raine's booming sports business (e.g., WWE, Chelsea FC, Manchester United, etc.) leverage Code's software industry expertise.

The bottom line: "Things didn't work out with Fred at Code, but that doesn't mean there had to be bad blood," says Smith, who'll become a San Francisco-based partner with Raine. "Deals are all about relationships."

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