MINNEAPOLIS - Piper Sandler Companies (NYSE: PIPR), an established investment bank, has announced a definitive agreement to acquire Aviditi Advisors, a firm known for its alternative investment banking services. The transaction is slated for completion in the late third quarter of 2024, contingent upon regulatory approvals and customary closing conditions.
Aviditi Advisors, co-founded by Ryan Schlitt and John Robertshaw, has been recognized for its comprehensive services to financial sponsors and global alternative investment managers. Since its inception in 2020, the firm has facilitated transactions exceeding $30 billion. Aviditi's approach integrates primary fundraising, secondary solutions, and capital markets expertise.
Post-acquisition, Aviditi Advisors will become Piper Sandler’s private capital advisory group. This move will integrate approximately 50 professionals, including ten managing directors, from Aviditi into Piper Sandler’s team. Co-founders Schlitt and Robertshaw will assume leadership roles within Piper Sandler, with Schlitt becoming head of private capital advisory and Robertshaw being appointed vice chairman of the same division.
Mike Dillahunt, global co-head of investment banking at Piper Sandler, emphasized the complementary nature of Aviditi’s business to Piper Sandler’s private equity-focused advisory services. He highlighted the importance of fundraising, private capital markets, and secondary solutions to financial sponsors.
Ryan Schlitt expressed enthusiasm for the new chapter with Piper Sandler, noting the synergy between the firms and the potential for growth. He also acknowledged the support from investors and clients in building Aviditi's business.
Piper Sandler was advised by Sullivan & Cromwell LLP, while Mayer Brown LLP and Keefe, Bruyette & Woods provided counsel to Aviditi Advisors.
This acquisition is expected to enhance Piper Sandler's service offerings to its primary client base in private equity, as stated in a press release statement. However, it is important to note that forward-looking statements contained in the announcement are subject to various risks and uncertainties, and actual outcomes may differ materially from expectations.
In other recent news, Piper Sandler Companies reported a strong first quarter of 2024, with adjusted net revenues of $334 million, an operating margin of 16.8%, and adjusted earnings per share (EPS) of $2.79. The company showcased significant growth in its corporate investment banking revenues, which rose by 25% to $210 million due to increased advisory and financing activities. Additionally, the company returned $88 million to shareholders through buybacks and dividends.
Piper Sandler also noted the robust growth in advisory services revenues, which reached $157 million with 57 completed transactions. The equity underwriting market also improved, doubling corporate financing revenues to $53 million. On the downside, equity brokerage revenues saw an 8% decline from the previous year.
These recent developments indicate Piper Sandler's strategic growth initiatives and disciplined expense management despite a challenging market environment. The firm is focused on growing its corporate investment banking revenues and expanding its product offerings. However, challenges persist in the equity brokerage and depository M&A sectors, and the company has not provided specific guidance for future quarters.
InvestingPro Insights
As Piper Sandler Companies (NYSE: PIPR) gears up to enhance its private equity services through the acquisition of Aviditi Advisors, investors may be interested in the company's financial health and market performance. According to InvestingPro data, Piper Sandler boasts a robust market capitalization of $3.24 billion USD, indicating its significant presence in the investment banking sector.
Investors should note the company's P/E ratio, which stands at 30.06 based on the last twelve months as of Q1 2024, reflecting a premium valuation that the market is willing to pay for its earnings. This is supported by a high earnings multiple, as indicated by one of the InvestingPro Tips, suggesting investor confidence in the company's future performance. Additionally, Piper Sandler has demonstrated a substantial gross profit margin of 89.08% in the same period, underlining the efficiency of its operations and the potential to sustain profitability.
In terms of stock performance, Piper Sandler has experienced a large price uptick over the last six months, with a 34.58% price total return, reinforcing the company's strong return over the past year at 61.14%. This trend aligns with another InvestingPro Tip highlighting the company's high return over the last decade, which could be a reassuring factor for long-term investors considering the stock's growth trajectory.
For investors seeking more in-depth analysis and additional insights, InvestingPro offers a range of tips, including expectations of net income growth this year and the prediction that the company will remain profitable. In total, there are 9 additional InvestingPro Tips available for Piper Sandler, which can be accessed by visiting https://www.investing.com/pro/PIPR. To further enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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