Bank of New York Co. announced Tuesday that its BNY Capital Markets Inc. subsidiary has signed an agreement to buy Patricof & Co. Capital Corp.

The deal would give Bank of New York a boutique-size middle-market player specializing in mergers and acquisitions, private placements, and financial advisory. Terms of the buyout were not disclosed.

"This acquisition complements our existing section 20 products and services," said Gerald L. Hassell, Bank of New York president.

The deal "enables us to provide advisory and special financing services that will be particularly beneficial."

Robert B. Machinist, president of Patricof & Co. Capital, did not return calls seeking comment.

But in a statement he called the buyout a "significant step" for Patricof's efforts to serve the entrepreneurial community. Patricof would be absorbed into BNY Capital Markets but keep its New York offices.

The Patricof deal does not include Patricof & Co. Ventures Inc., one of the country's leading venture capital firms. That firm, headed by financier Alan J. Patricof, a well-known supporter of President Clinton, recently set up a $410 million venture capital fund, according to Private Equity Analyst, an industry newsletter. Mr. Patricof does not hold a title at Patricof & Co. Capital.

The deal for Patricof would be the latest in a series of small buyouts that have bolstered BNY Capital Markets. In March, Bank of New York bought Mendham Capital Group Inc., a New Jersey institutional broker-dealer for government and corporate securities.

Analysts mostly shrugged at news of the deal. Ronald L. Mandle, an analyst at Sanford C. Bernstein & Co., said the capital markets division continues to be a side business for the bank.

"I'm not sure what their thinking is," Mr. Mandle said. "It's clearly not a key area of growth. Their core business is processing" and custodial services to others in the financial services industry.

In a summer research report, Prudential Securities analysts Joel W. Silverstein and James E. Moynihan said Bank of New York was becoming "increasingly dependent" on acquisitions for earnings growth.

BNY Capital Markets received section 20 authority just last year. Since then it has built its business through small buyouts. The subsidiary also bought a minority stake in Financial Models Co., a Toronto financial software firm.

Bank of New York, however, is among the leaders in syndicated lending. It was ranked seventh among lenders with 34 deals worth $13.3 billion and a market share of 4.6% in the first half, according to Securities Data Co.

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