How Bank of America quietly rebuilt its U.S. M&A business
Twelve months can be a long time in M&A. Around a year ago, Christian Meissner left Bank of America, where he was head of the corporate and investment bank. Almost ever since he left, BofA has been busy hiring.
Since the start of 2019, Bank of America has hired 50 bankers worldwide to boost its coverage, and the majority of its recruitment dollars have been spent in the U.S.. The bank has built out its senior ranks, hiring the likes Gregg Polle from Moelis & Co as a vice chairman in M&A, Rick Sherlund from Perella Weinberg in technology, Janis Vitols from Barclays as head of global asset management investment banking, or Amy Lissauer from Evercore as global head of activism and raid defense.
It's not just senior staff. BofA is building a new M&A team dedicated to private sales and divestitures. This team has already grown from four to 17 bankers and the bank says it will reach 30 by the middle of next year.
BofA has also recently launched a new effort named 'emerging growth and regional coverage', which houses its regional investment banking practice. In August it hired Sam Kumar from Citi to run the new group in San Francisco alongside Brendan Hanley in New York. Kumar and Hanley’s group has a focus on 'emerging private companies' across tech, ecommerce, consumer, fintech, cleantech and biotech.
The bank has also made a big push in the mid-market, quietly assembling the biggest team on the street. Three years ago, it established its regional investment banking practice to service mid-market corporates with revenues between $50m and $2bn. Speaking at a conference earlier this month, chief operating officer Tom Montag said the bank's revenue from mid-market clients rose 17% in the seven months to July 2019. “We were more focused on the top 100,” said Montag referring to BofA's client focus by size. “- We’re now going 400-deep.”
Montag and Matthew Koder, the man who replaced Meissner at the helm of the investment bank, aren't the only ones chasing the mid-market. Goldman Sachs, Citi and JP Morgan are all pursuing a similar strategy. The mid-market is increasingly attractive as the M&A cycle starts to turn, plus it includes fast-growing private companies that are not traditional users of capital market.
BofA's push, however, seems to be paying off. Alongside its 17% mid-market revenue increase, BofA's U.S. M&A team which is run by Kevin Brunner and Ivan Farman, has been in the thick of big deal action, advising Occidental Petroleum on its $57bn acquisition of Anadarko Petroleum, First Data Corp on its $48bn sale to Fiserve and DowDupont on the $55bn spin off of Dow Inc..
“We’ve just got a new intensity about ourselves and what we’re doing, and that’s allowed us quite frankly to ramp it up,” Montag told last month's conference.
It's starting to show in the league tables. Overall BofA was ranked sixth for U.S. announced M&A deals in the first six months of the year, down from fourth a year ago, according to Dealogic. However, the bank jumped three places to sixth in the completed M&A fee rankings.
This real test will come in 2020 though. By next year the new hires should have bedded down and it the effects of BofA's U.S. M&A offensive should be clear. Watch this space.
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