PA's deal pipeline slows to a trickle
Pennsylvania banks and companies have slowed down on deal-making and are waiting to see if the national markets recover, says Joe Harenza at Griffin Financial.
You can feel business slowing down, say the people who run Griffin Financial Group, the Pennsylvania investment bank headed by Stevens & Lee chairman Joseph M. Harenza.
In June, there were 12 "probable" deals expected to close within the year at the firm's investment meeting, recalls chairman emeritus William A. Frack, a veteran Philadelphia investment banker. Clients in dals closed earlier this year include the Harrisburg Senators, the Reading Eagle, adn former Sovereign Bank chief Jay Sidhu's two investmetn companies. But in September, there were just three or four deals rated "probable," Frack said.
Griffin is advising clients how to cope with and profit from the federal bank bailout, and its tax implications, said Harenza during a visit to his King of Prussia office. Read Griffin's review of the proposal, before it was passed, here.
It's not that Pennsylvania-area banks are in special trouble. PNC, M&T, National Penn, Susquehanna, Wilmington Turst Co. and WSFS "aren't stressed. They don't have the liquidity problems," said Harenza. "But in the past few weeks, everyone has gotten scared and shut off the spigot." Mid-market corporate financings "aren't getting done."
Frack favors Wells Fargo & Co. over Citigroup to take over the 200-plus local offices of troubled Wachovia Bank, whose fate is being negotiated with federal regulators. "We're already in Citi's market area; they're based in New York. We'd be just another small spot for them," Frack said. "Wells Fargo would be better for the city. They'd have to make a new geographic committment to be here."
But there's no substitute for the Philadelphia-focused lenders that used to line Broad St., added Harenza. "We don't really have a hometown bank. I can't tell you how much that hurts the city."
What'll it take to get business growign again? "Everyone's trying to predict the bottom of the market," Harenza said. Once that happens, "here will be a great opportunity to take lending relationships from the big guys."Especially since so many of the big guys -- Wachovia Corp., Lehman Bros., Merrill Lynch -- won't be around anymore. "It'll be a good time to pick some pockets."
Until then, "it's a great time to by distressed assets," if you can raise the cash.