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Piper, Sandler officially join forces

Sandler O'Neill & Partners LP's run as an independent company has come to an end.

Piper Jaffray Cos. announced Jan. 6 the closing of its acquisition of Sandler O'Neill, with the buyer changing its name to Piper Sandler Cos. The founders of Sandler O'Neill established the company in 1988, but the origins of the firm date back to earlier in the 1980s, when a group worked at L.F. Rothschild Unterberg Towbin before moving to Bear Stearns & Co. Inc., said Jimmy Dunne, now vice chairman and senior managing principal at Piper Sandler.

Dunne, speaking in a video posted on Piper Sandler's website, did not provide details but suggested the team was not happy at Bear Stearns. "Some things happened at Bear Stearns, typical big firm stuff," Dunne said.

He added that Herman Sandler had the idea of leaving to start another company, and the two of them along with four others launched Sandler O'Neill. The company grew to 171 employees but lost 66 — including Herman Sandler — as a result of the Sept. 11, 2001, terrorist attacks on the World Trade Center in New York, where the firm had its headquarters. Dunne led a rebuild of Sandler O'Neill, which had about 300 employees upon the announcement of its sale to Piper Jaffray, according to an investor presentation.

Many of the employees have now moved to Piper Sandler and are leading the financial services team. Equity research was one of the areas where the two companies had overlap. Three analysts who had been with Piper Jaffray joined the financial services research team at Piper Sandler, according to Mark Fitzgibbon, director of research at Sandler O'Neill and now head of the financial services research group at Piper Sandler.

Fitzgibbon noted that the financial services research team includes former Piper Jaffray analysts Kevin Barker, whose coverage includes mortgage and consumer finance; Matthew Clark, whose coverage includes West Coast banks; and Nathan Race, whose coverage includes Midwest banks.

"We have the same Sandler team intact and we supplemented it with some talented people from the Piper side," Fitzgibbon said in an interview.

Fitzgibbon confirmed that Timothy O'Brien, who covered West Coast community banks for Sandler O'Neill, is no longer with the company. Two other Piper Jaffray financial services senior research analysts, Brett Rabatin and Jason Deleeuw, are not listed on the Piper Sandler financial services equity research team on the company's website.

Fitzgibbon referred questions about Rabatin and Deleeuw to Michael Cox, Piper Sandler's co-head of equities. However, Cox, Piper Sandler Associate Director of Research Jennifer Baxter and a Piper Jaffray media contact did not return calls seeking comment. A source familiar with the research team said Rabatin and Deleeuw are no longer with the company, and their registration ended Jan. 6, according to Financial Industry Regulatory Authority Inc. records.

Two other former Piper Jaffray financial services analysts, Matthew Breese and Broderick Preston, departed for Stephens Inc.

Piper Jaffray and Sandler O'Neill each had investment banking personnel dedicated to the depository sector, and when the deal was announced, pro forma data suggested that the combined company would sit on top of the depository financial advisory M&A league tables for number of deals. After the announcement, Piper Jaffray saw the departure of Robert Hutchinson, who was head of financial services investment banking, and Michael Barry, a managing director on the FIG i-banking team. However, Hutchinson and Barry focused on clients in the mid-Atlantic and Northeast, areas where Sandler O'Neill already had i-banking coverage.

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The two firms had little overlap based on their financial advisory M&A deal history in the bank and thrift space. Since the July 9, 2019, announcement of the Piper Jaffray and Sandler O'Neill deal, the two companies have combined to work on 37 U.S. bank and thrift M&A deals, which is more than any other investment bank, according to S&P Global Market Intelligence data.

While depositories have always been a core focus of Sandler O'Neill, the company did work with other financial services clients. For example, Sandler O'Neill advised TD Ameritrade Holding Corp. on its announced $26 billion sale to Charles Schwab Corp.

The TD Ameritrade and Charles Schwab assignment was the largest deal in Sandler O'Neill's history.