Piper Jaffray to Buy Sandler Boutique for $485M

The merger of the two investment banks puts them on "a stronger footing to compete for midmarket merger and acquisition assignments."
Matthew HellerJuly 9, 2019

Piper Jaffray has agreed to acquire boutique investment bank Sandler O’Neill for $485 million in a move that could boost its M&A business.

Sandler O’Neill is a leader in advising small and midsize banks on deals, participating in 498 financial services transactions with an aggregate deal value of $124 billion since 2012. Of its 300 employees, 85% serve in client-facing positions.

Piper Jaffray said Tuesday it would pay $350 million in cash and another $135 million, primarily in restricted Piper Jaffray stock, for the firm. It will also provide $115 million to retain Sandler employees.

“With Sandler O’Neill, we … could not be positioned better to compete in the financial services sector over time,” Piper CEO Chad Abraham said in a news release. “This transaction strengthens, diversifies and accelerates the growth of the Piper Jaffray investment banking, capital markets, and institutional distribution businesses.”

Combined, the two firms generated 2018 advisory services revenues of $573 million and investment banking revenues of $839 million.

As The Financial Times reports, the deal comes “amid a flurry of takeovers in the U.S. banking markets, with larger institutions like JPMorgan Chase, Bank of America and Goldman Sachs muscling into the lucrative business advising [midsize] clients.”

Sandler currently competes in the market for midsize deals, generally those worth less $500 million, with such firms as Houlihan Lokey, Stifel Financial, Raymond James, William Blair, and Baird. Raymond James recently acquired boutique investment bank Silver Lane Advisors, which specializes in financial sector M&A.

“The deal between Piper and Sandler puts the two banks on a stronger footing to compete for midmarket merger and acquisition assignments,” the FT said.

The merger is expected to close in January and the combined firm will be known as Piper Sandler. “We are excited to combine with Piper Jaffray and build on the strength of both of our businesses,” Jimmy Dunne, senior managing principal at Sandler, said.

Takeovers between financial groups this year have totaled $137.5 billion worldwide this year, up 9% from a year ago, according to Dealogic.