Canaccord Genuity Group Inc. expanded its U.S. investment banking platform on Wednesday by acquiring New York-based boutique advisory firm Petsky Prunier LLC for $60-million.
Canaccord is acquiring an employee-owned firm that offers merger-and-acquisition advisory services to mid-sized companies in the technology, internet, media and health-care sectors – areas where the Toronto-based dealer already has a domestic franchise. Petsky was founded in 1999 and is led by 16 senior investment bankers, working from offices in New York, Las Vegas, Chicago, and Charlotte, N.C.
"The addition of Petsky Prunier creates an exceptional opportunity for our North American capital markets business,” said Canaccord CEO Dan Daviau in a press release. Canaccord will pay $40-million in cash and issue $20-million of its own stock to Petsky’s employee shareholders, with the Canaccord stock vesting over three years. The incoming Petsky bankers can earn up to an additional $53.2-million in cash over the next four years if they meet performance targets.
The acquisition will see Sanjay Chadda, currently a partner and managing director of Petsky, join the executive committee at Canaccord’s U.S. division and co-lead the firm’s U.S. investment banking group. Mr. Chadda is part of a Petsky team that has established a niche expertise in advising internet media and advertising companies on major transactions.
Canaccord is expanding in the U.S. while rival independent dealer GMP Capital Inc. is pulling back from international expansion. In December, Toronto-based GMP sold a U.S. fixed-income business for an undisclosed price after acquiring the division in 2011 for US$44-million. GMP also closed offices in Britain and Australia in 2016.
Mr. Daviau said on Wednesday that Canaccord is acquiring Petsky as part of a plan to increase the scale, profitablity and stability of revenue from its U.S. banking business. In the most recent quarter, Canaccord made a $6-million profit on revenue of $70-million from U.S. investment banking, compared with earning $25-million of profit on revenue of $77-million from its Canadian capital markets business.
Canaccord has approximately 520 employees in its capital-markets group, including approximately 190 investment bankers at 20 offices in North America, Europe, Asia and Australia. The firm also has a wealth management franchise with 350 investment advisers overseeing approximately $66-billion in assets. The firm’s last major acquisition was the purchase of British money manager Hargreave Hale Ltd. for $88-million in the fall of 2017.
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