SAN FRANCISCO - It's goodbye megamerger; hello, mini-deal.
Underlining the current wisdom that big banks are more likely to buy their smaller brethren than to match up with other huge competitors, Merrill Lynch & Co. has hired a team of mergers and acquisitions advisers to specialize in midsize financial institutions.
The three-person team, led by managing director Jean-Luc Servat, until recently advised small and midsize West Coast banks and thrifts at Hoefer & Arnett, a San Francisco firm that specializes in financial institution transactions.
Two weeks ago, Mr. Servat and two colleagues joined the San Francisco office of Merrill Lynch, where they have started a financial institutions unit within the firm's middle-market mergers advisory group.
This group, known internally as Exclusive Sales and Divestitures, targets transactions in the $30 million to $300 million range. Mr. Servat said his group will focus on depository institutions with about $200 million of assets. Aside from being consolidators in their own right, these institutions are increasingly expected to be acquisition candidates for the class of larger banks known as superregionals.
"Like other bulge-brackets in the mid-1990s, [the financial institutions group] at Merrill moved towards larger transactions and it worked well," said Mr. Servat. "Now, there is a sense that the very large transactions may, if they haven't petered out, have slowed down, and no one wants to depend on them," he said.
With Mr. Servat, Merrill has hired two other ex-Hoefer investment bankers: Michael Namba, a vice president, and Olaf Vlieks, an associate. Mr. Servat reports to Kevin Albert, managing director and head of the Exclusive Sales and Divestiture Group, which gets many of its investment banking leads from retail brokerage representatives across the country.
The new team will work closely with Merrill's financial institutions group, lead in the United States by Gregory Fleming, particularly when they present larger banks with acquisition ideas aimed at smaller institutions on the West Coast. The middle-market financial institutions group may ultimately expand this group beyond the West Coast, Mr. Servat said.
A veteran of financial institutions investment banking, Mr. Servat is in fact returning to Merrill Lynch with his recent move. Until 1990, he was a managing director in financial institutions investment banking when Merrill Lynch had a seven-person team in San Francisco. Following stints in Merrill's industrial group and then in the investment bank's Hong Kong office, he returned to San Francisco to set up a financial institutions team for Alex. Brown. After Bankers Trust Corp. bought the Baltimore brokerage, he joined Hoefer & Arnett in 1998.
Merrill appears to have already won one deal as a result of the hire, even though it was selected as adviser prior to Mr. Servat's move. Last week, the brokerage advised on a two million-share offering for Silicon Valley Bancshares - a frequent investment banking client of Hoefer & Arnett, thanks in part to contacts made by Mr. Namba, a former executive at Silicon Valley in Santa Clara, Calif.