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Marlin Quoted in Deal Driver- Financial Services

Sep 1, 2010

Marlin Quoted in Deal Driver- Financial Services

In the News , , 0 Comments

Today our managing partner Ken Marlin was quoted in a discussion of the the new Financial Reform Act by Monique Lewis for Deal Drivers -Financial Services.

Financial Reform Act will push smaller banks to sell, while FDIC deals get tougher to do. As the Financial Reform Act is put into action, buyers and sellers will approach M&A cautiously.

“There will be a lot of M&A activity but not in the next six months. Buyers still have options to merge via assisted deals with the Federal Deposit Insurance Corp (FDIC),” he added.

In the past six months, the FDIC forced many banks in the Midwest and Northwest into receivership. But those deals are slowing down in terms of large-scale opportunities and pricing has increased, making traditional M&A more appealing, several industry sources said. Bank divestitures will be particularly appealing into 2011 because “buyers want branches, deposits and good loans,” one of the sources said.

Stressed survivors will sell for a low premium or no premium to larger players, said Jeff Brand, principal at KBW. “Expect activity like Sun Bancorp and WL Ross & Co. deals in the Midwest in the coming months,” Brand said. On July 8, 2010, Sun Bancorp announced a US$100m equity investment from WL Ross. At the same time, an increase in capital gains tax next year will push small-to-mid-sized players to merge with larger players.

In the financial technology space, M&A will be driven by three groups of sellers: entrepreneurs who went through hard times and have pent-up desire to sell, private equity firms who see opportunities to get liquidity, and corporations divesting divisions, said Ken Marlin, founder of Marlin & Associates, an investment bank that advises fintech companies. Marlin said his firm expects a lot of activity in the US$50m – US$200m range, with strategic players able to fund such smaller deals using their own cash and borrowing capacity. But private equity remains cautious in the financial technology space, he added.

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