Piper Jaffray Nearing Deal to Buy Sandler O'Neill for $485 Million

Per WSJ: https://www.wsj.com/articles/piper-jaffray-nearing...
What are everyone's thought on this? Obviously Sandler is a player in small/mid size banking and brings an end to the Sandler O'Neill name that saw them survive the September 11th terrorist attacks. Always though this was a good, inspiring read:
https://fortune.com/2015/09/11/september-11-sandle...
"Sandler's investment bankers were determined not to abandon a single deal--both as a matter of pride and to send a signal to the Street that the firm was open for business. So it was that on Sept. 12--yes, Sept. 12--they filed to underwrite a long-planned secondary offering."

Comments (33)

Jul 8, 2019

They have worked on some of the largest and most prominent FIG deals as well. Great firm from what I hear on the street. Don't like this deal and really liked them as a private firm.

    • 1
Jul 8, 2019

Piper definitely won on this one. I am currently at a tier 1 FIG team and have worked across the Sandler guys on a number of deals. Extraordinarily smart people there. Not sure what it means for Sandler as a name going forward.

    • 1
Jul 8, 2019

I second this - worked for a community bank in treasury that they covered and was always impressed by the analyst from Sandler's questions. Them and KBW..

Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.

Jul 8, 2019

Wow. Piper won huge

    • 1
Jul 8, 2019

PJC trying to replicate the success SF has had with KBW. Bet the Sandler name stays for FIG (though Piper Sandler O'Neill is a mouth full). Wouldn't be surprised if they're considering ways to build/buy a decent wealth platform as well.

KC

Funniest
Jul 8, 2019

Per article they are going with Piper Sandler's.. sounds like Adam's mom

Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.

    • 2
Jul 8, 2019

That is incorrect, Piper is purely an institutional shop. They sold their wealth management business years ago, so it wouldn't make sense for them to re-enter the market. Sandler does a fair number of corp primary offerings though, and has a strong placement business on top of general advisory services so that's what Piper is buying.

    • 2
Jul 8, 2019

Not surprised - Piper has been trying to build out its FIG presence in the last few years.

Jul 8, 2019

Wasn't piper's last acquisition of Simmons In Houston a total mess? What did they pay for that?

    • 1
    • 3
Jul 9, 2019
high hopes:

Wasn't piper's last acquisition of Simmons In Houston a total mess? What did they pay for that?

Where have you heard that? From what I've heard all the old MDs are still there and they still have good deal flow.

Jul 9, 2019

Better not have thrown monkey shit at me. Heard that Piper's involvement created a negative effect on culture and process in Houston.

They lost a decent amount of associates and VPs in IB as laterals.

Deal flow was mediocre in 2018 (# of deals is meaningless, especially for capital markets)

I think they lost or trimmed a decent amount of research talent too, noticeably lower quality output.

    • 1
    • 6
Jul 8, 2019

Whether you're acquired by Piper or Nike you'll end up working in a sweatshop either way! :)

Jul 8, 2019

Sandler O' has always punched way above its weight. Very underrated.

"Work ethic, work ethic" - Vince Vaughn
    • 4
Jul 9, 2019

This is just PJs strategy - roll up boutiques to theoretically crush their share. Hasn't exactly worked out so smoothly in the past... PJ just houses these firms under their umbrella (ie. xyz, a Piper Jaffrey Company) without any regard to the name / brand dilution which arguably makes a huge difference. Have done considerable work in this space previously so just my two cents. PJ was generally an example of how NOT to roll the space up.

    • 2
Jul 9, 2019
TheBuellerBanker:

This is just PJs strategy - roll up boutiques to theoretically crush their share. Hasn't exactly worked out so smoothly in the past... PJ just houses these firms under their umbrella (ie. xyz, a Piper Jaffrey Company) without any regard to the name / brand dilution which arguably makes a huge difference. Have done considerable work in this space previously so just my two cents. PJ was generally an example of how NOT to roll the space up.

To play devil's advocate:

  • Can you point to specifics for why you don't think it has worked for PJC? The Charlotte office (Edgeview) has poached some good talent in the past three years and the deal flow seems strong.
  • What are some examples of groups that have done it right?
    • 2
Jul 9, 2019
TheBuellerBanker:

(ie. xyz, a Piper Jaffrey Company) without any regard to the name / brand dilution which arguably makes a huge difference. Have done considerable work in this space previously so just my two cents. PJ was generally an example of how NOT to roll the space up.

lol if you're going to shit on a firm with little to no basis, please spell the name right...

    • 2
Jul 9, 2019

"the company, which will be known as Piper Sandler Cos., the people said."

Most Helpful
Jul 9, 2019

Sandler was one of wall streets best kept secrets. Truly the titans of FIG

    • 9
Jul 9, 2019

How does one even value a boutique M&A shop?

Before you crucify me, I'm looking at this beyond fees (cash flows), what's to prevent the BSD at Sandler from cashing out or hanging it up? Even if they have contracts where they're committed to PJ for a number of years, what's to prevent them from putting it in cruise control?
To me it seems like these kind of deals can go bad quickly in that sort of scenario. In my mind you're buying a name that's only as good as the bankers behind it.

    • 2
Jul 9, 2019

There is an element of uncertainty behind human capital as you suggest, but all top producers are locked up; principals and managing directors.

Additionally, the consideration is partly stock so you are incentivized to perform. Even more than that, there is compensation put aside for productivity.

There are a bunch of hungry guys still looking to get ahead, and need to keep a solid track record if they want to have a future in finance.

    • 2
Jul 9, 2019
EbbsAndFlows:

How does one even value a boutique M&A shop?

Before you crucify me, I'm looking at this beyond fees (cash flows), what's to prevent the BSD at Sandler from cashing out or hanging it up? Even if they have contracts where they're committed to PJ for a number of years, what's to prevent them from putting it in cruise control?
To me it seems like these kind of deals can go bad quickly in that sort of scenario. In my mind you're buying a name that's only as good as the bankers behind it.

There's usually some pretty fat earnouts involved as well.

    • 1
Jul 9, 2019

Sandler is a great firm, with an eat what you kill mentality and a dope culture. Those that excel there advance very quickly and make a killing with respect to year end bonuses. They are pretty unparalleled when it comes to FIG deals (beat out all of the top BBs iirc) and have excelled within their niche for a long time. Had a friend intern with them and he absolutely loved it, still plays golf with some of the partners and VPs there.

Regarding retention of the senior guys and top talent as @EbbsAndFlows they are still incentivized through their rollover equity and bonuses. Hard to say how many will stay. Many may leave if the culture tanks though. I agree that it is a risky play and the long term consequences could be devastating. Curious about the valuation process too. I feel as though the valuation deals with SO's FCF and a major factor would be their long lasting relationships with specific banks and thrifts.

    • 1
Jul 9, 2019

https://fortune.com/2015/09/11/september-11-sandle...
Wow... I just read this article and it is so emotional, really shows the character of the firm and serves as a reminder to how painful 9/11 was. Thank you for including it.

    • 1
Jul 9, 2019

You got it - think everyone should read it.

Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.

    • 2
Jul 9, 2019

This is something that really stuck to me -- https://www.golfchannel.com/video/how-golf-saved-l...

    • 1
Jul 9, 2019

link is dead for me. is it this article?
https://fortune.com/2011/09/01/sandler-oneills-jou...

Jul 9, 2019

Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.

Jul 9, 2019

CIBC just announced it is going to buy Cleary Gull, a small lower MM boutique in Milwaukee

"Canadian Imperial Bank of Commerce (CIBC) [TSX: CM] [NYSE: CM], based in Toronto, Ontario, has agreed to acquire Cleary Gull, a Milwaukee-based boutique investment banking firm specializing in middle market M&A, private capital placement and debt advisory"

Jul 10, 2019
Comment
"Work ethic, work ethic" - Vince Vaughn