PNC Purchases M&A Firm

PNC Financial Services Group Inc. last week agreed to buy Harris Williams & Co., an M&A advisory boutique known for its focus on the middle markets. The deal is expected to close during the next quarter, with financial terms not being disclosed.

“We’ve known PNC a very good while, because they are one of the top two credit lenders to the middle markets,” says Hiter Harris, co-founder of Harris Williams. “They also offer some mezzanine and treasury services, so this is a very good fit.”

Harris Williams will operate as a unit of PNC, and plans to maintain its Richmond, Va., headquarters and satellite offices in Boston and San Francisco. It also will retain its name, the subsidiary Cobblestone Advisors (which focuses on the lower middle-markets) and almost all of its 110 employees.

The firm is no stranger to corporate parents, having been acquired in 1996 by Sirrom Capital for nearly $25 million in stock. Sirrom was subsequently acquired by The Finnova Group Inc., but Harris Williams bought its way out of the arrangement before Finnova went bankrupt in 2001. It has occasionally flirted with other buyers, but got particularly serious a few months back when it hired Goldman Sachs to explore various options for strategic growth.

“We’ve been Harris Williams for 15 years, and have doubled in size every two or three years,” Harris says. “We always think strategically about how we can grow, and doing it independently was definitely an option. We didn’t have to do anything here.”

At the same time, PNC was looking to strengthen its middle-markets practice, and the two firms negotiated for about two months before the final agreement was signed.

“We were specifically focused on Harris Williams because they are unique in that middle-market M&A is all that they do,” says Amy Vargo, a spokeswoman for PNC.

Recent Harris Williams clients include MicroGroup Inc. on its sale to Kirtland Capital Partners, Wastequip Inc. on its sale to DLJ Merchant Banking Partners and American Asphalt & Grading Co. on its sale to Code Hennessy & Simmons.