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There was no secret that Bank of America Corp. (NYSE: BAC) wanted to sell First Republic.And so today the deal was announced: BofA got more than $1 billion from a consortium of private equity operators. They include General Atlantic LLC and Colony Capital.
Actually, First Republic was a part of Merrill Lynch (which of course BofA purchased last year). Interestingly enough, Merrill Lynch purchased the bank for $1.8 billion in late 2007.
James Herbert II founded First Republic in the mid 1980s, with a focus on wealth management. All in all, he has done a good job managing the firm -- with a conservative focus (hey, rich clients don't like drama, right?). Thus, it was not too difficult to find a buyer. Apparently, other private equity firms made bids for the firm, including TPG, Carlyle and the Blackstone Group (NYSE: BX).
Herbert plans to stay on board as the chief of First Republic. What's more, it looks like he'll have a hefty equity stake, which is something private equity firms like to see in their deals.
As for BofA, the deal makes sense as it tries to pump up its capital ratios as well as find ways to pay back federal bailout loans. Keep in mind that the firm has struck other deals, such as the sale of its Columbia Management unit for $1.2 billion.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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