Piper Jaffray Cos. (PJC.N) agreed to buy Sandler O’Neill & Partners LP for US$485 million to build up its merger-advisory and fixed-income businesses.

The new company will be called Piper Sandler Cos., the firms said Tuesday in a statement. Piper Jaffray will acquire 100 per cent of the equity and partnership interests in Sandler O’Neill in a deal that includes a US$350 million cash component and $135 million in restricted consideration, primarily Piper Jaffray restricted stock, to Sandler O’Neill partners.

Sandler O’Neill, founded in 1988, has advised on more mergers involving financial-services companies than any other investment bank every year since 2012, according to the statement. Piper Jaffray agreed to provide $115 million in long-term retention incentives to Sandler O’Neill employees, and all of the company’s partners have entered into employment agreements in connection with the transaction.

“The combination accelerates Piper Jaffray’s goal of prioritizing and building its M&A advisory business, adds a differentiated fixed-income business and significantly expands the breadth and depth of the firm’s equity research, and sales and trading franchise,” the company said in the statement.

Boutique investment banks have attracted attention from Wall Street giant Goldman Sachs Group Inc., which at one point debated whether to purchase firms including William Blair & Co. and Harris Williams & Co., people familiar with the matter said earlier this year. The talks with William Blair ultimately broke off, and PNC Financial Service Group Inc., which owns Harris Williams, has said the unit isn’t for sale.

Bank Deals

Among the recent deals on which Sandler O’Neil was an adviser were MB Financial Inc.’s $4.7 billion takeover by Fifth Third Bancorp. and Hamilton State Bancshares Inc.’s $405.7 million purchase by Ameris Bancorp.

Jimmy Dunne, senior managing principal at Sandler O’Neill, will be a vice chairman at Piper Sandler and senior managing principal of the financial-services business. Jon Doyle, senior managing principal at Sandler O’Neill, will lead Piper Sandler’s financial-services business. All investment banking, capital markets, fixed-income and equities resources dedicated to the financial-services industry will report to him, according to the statement.

The combination almost doubles Piper Jaffray’s fixed-income business. Pro forma advisory-services revenue for 2018 would have been $573 million, and investment-banking revenue would have been $839 million. The transaction is expected to be completed in January.