BusinessFinancial institution of America Rewires Its Non-public Financial institution...

Financial institution of America Rewires Its Non-public Financial institution to Generate Offers Enterprise


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  • Financial institution of America’s funding financial institution has gone after middle-market offers since 2016.
  • Now its leaning on its relationship with the non-public financial institution to assist determine new shoppers.
  • The transfer come amid booming financing choices for personal enterprise house owners.

Financial institution of America is hoping its ultra-rich shoppers who’ve based their very own firms will probably be a goldmine for its funding financial institution. To see that occur, it is rewiring its non-public bankers to assume extra like dealmakers.

Since 2016, BofA has been going after middle-market firms — an area of banking that sometimes values companies between $500 million and $2 billion — by means of a unit it calls rising development and regional protection. And house owners of privately held firms characterize a superb chunk of the enterprise the funding banking unit has been chasing.

Brendan Hanley, co-head of the group, stated it is beefed up protection to 23 cities right now, from six in 2019, together with Charlotte, North Carolina; San Diego, California; and Austin, Texas. Banker rely has risen by “a number of dozen” from roughly three dozen just a few years in the past.

a headshot of Brendan Hanley Bank of America

Brendan Hanley, co-head of Financial institution of America’s rising development and regional protection group.

Financial institution of America

In an effort to supercharge that development, Hanley’s now working hand-in-hand with Evan Beard, head of personal enterprise companies at Financial institution of America’s non-public financial institution, to assist usher in new shoppers.

As a part of their collaboration, which kicked off final 12 months, Beard has adjusted the non-public financial institution’s operations, together with by means of its business-owner group, a unit initially targeted on conventional private-banking wants like enterprise loans or wealth-management companies.

The position of enterprise proprietor strategist, for instance, has been revised to raised cater to personal enterprise house owners eyeing acquisitions, seeking to increase cash, or weighing divestitures. These staffers sit within the non-public financial institution and work solely with business-owner shoppers on all the things from property planning to company gross sales, which might in fact be transitioned to the funding financial institution, the place M&A and capital-markets alternatives await.

“We’re coaching our non-public bankers to go discover origination alternatives,” Beard advised Insider.

Headshot of Bank of America's Evan Beard

Evan Beard, head of personal enterprise companies at Financial institution of America’s non-public financial institution

Financial institution of America

“There may be an expectation that there must be seamless execution from the early-stage planning to the execution on M&A or the IPO,” Hanley stated of the financial institution’s rising enterprise proprietor shoppers.

Nimble competitors

BofA’s amping up its technique as funding banks typically eye the following middle-market darling to take public or promote to their private-equity shoppers, that are sitting on about $1 trillion in unused capital.

Competitors is fierce for middle-market deal movement as bulge-bracket banks tussle with direct lenders, buyout outlets, and boutique funding banks.

Direct lenders, like Owl Rock or Golub Capital, can typically lend to middle-market firms faster than large banks as a result of they don’t seem to be topic to the identical regulatory purple tape that BofA and its Wall Road friends face.

Non-public-equity companies like KKR and Apollo have additionally constructed their capital markets and credit score desks that they use to lend to, or make investments fairness in middle-market firms.

“You’ve nimble opponents within the center market which have arrange their operations to thrive,” stated Mark Williams, the chief income officer at Datasite, a software program platform that screens the life cycle of M&A offers. “They do not carry the overhead of a giant bulge-bracket financial institution.”

And Wall Road banks, from JPMorgan to Jefferies, have been deeply-entrenched in middle-market enterprise, significantly by means of financing private-equity companies’ acquisitions within the high-yield bond and syndicated-loan markets.

Bulge-bracket peer Citi can also be competing within the house — and just lately nabbed 4 bankers from BofA’s private-capital-markets group, as Insider reported in August. Like Hanley and Beard’s groups, this unit additionally scouts younger firms in high-growth sectors that may be nurtured by means of non-public transactions, earlier than tackling the general public markets with the funding financial institution.

UBS, in the meantime, adopted an identical technique when it introduced collectively its wealth-management enterprise and funding financial institution to focus on extra middle-market offers, as Insider reported final November.

‘There’s a lot to do right here’

Even earlier than it teamed up with the non-public financial institution to spice up enterprise, BofA’s middle-market efforts have borne fruit because the group’s inception in 2016.

After failing to crack the highest 10 in 2018, BofA completed third in US middle-market M&A charges in each 2019 and 2020, in line with Dealogic information.

This year-to-date, the financial institution sits fifth, with about $176 million in mid-market M&A transactions, Dealogic information confirmed, behind Goldman Sachs, JPMorgan, Jefferies, and boutique Moelis. Dealogic classifies middle-market dealmaking as transactions valued between $100 million and $1 billion; nonetheless, some Wall Road companies calculate mid-market shoppers in a different way.

Financial institution of America says that based mostly on its proprietary calculations, it presently sits fourth with practically $1.8 billion in charges from nearly 1,300 offers to this point this 12 months.

BofA’s presently advertising and marketing $725 million in loans to help the acquisition of Summit Behavioral Well being, a supply aware of the transaction stated. Jim Momtazee’s healthcare-focused funding agency Affected person Sq. Capital agreed to purchase Summit from middle-market traders Lee Fairness Companions and FFL Companions in September.

BofA’s additionally main a $400 million mortgage for information science tech agency System1 Group, which is able to help its merger with particular function acquisition car Trebia, a second supply stated. BofA additionally suggested Trebia on the tie-up with System1 in late June.

The agency this 12 months additionally bought privately-owned waste-water utility platform Ni-Pacolet to SouthWest Water Firm and petroleum terminal operator Lincoln Terminal Firm to Colonial Pipeline.

“Given the extent of exercise, there’s a lot extra to do right here. We have by no means seen extra demand than we do proper now,” Beard stated. “You’ve traditionally low rates of interest and an enormous pot of capital on the sideline competing to take out these founders.”

However it’s not the primary time BofA has tried to crack the house.

When the financial institution employed people devoted to tackling the center market in 2016, it got here 4 years after BofA dismantled an identical enterprise to give attention to bigger shoppers and greater offers, Reuters reported on the time.

Bulge-bracket lenders could also be making a extra concerted effort to deal with the center market this time round, particularly given the urge for food by private-equity companies to purchase smaller firms. However BofA’s stuttering effort within the final decade will not be misplaced on market observers.

“It is not the primary time the bulge brackets have checked out or tried to enter the center market. The query is how lengthy they are going to be there,” stated Datasite’s Williams.

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