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Capital One (COF) to Acquire KippsDeSanto, Enter M&A Market

Zacks Equity Research

Capital One Financial Corporation COF has agreed to acquire Tysons Corner, VA-based investment banking firm, KippsDeSanto & Co. Terms of the deal, which is expected to close late in the third quarter of 2019, were not disclosed.

KippsDeSanto focuses on serving growth-oriented aerospace/defense, government services and technology companies. The firm also specializes in merger and acquisition (M&A) advisory services. Since its opening in 2007, it has advised on more than $17 billion in deals.

By acquiring KippsDeSanto, Capital One is making its entry into the M&A market.

Once the transaction is complete, KippsDeSanto will become a wholly-owned subsidiary of Capital One but will continue to operate under its brand name.

Steve Tulip, the head of Capital Markets, Capital One Commercial Banking, stated, “Capital One and KippsDeSanto have a shared goal of providing clients with trusted advice and counsel enabled by deep industry expertise and a seamless client experience. By bringing our teams together, we'll be able to add scale and expertise to our growing M&A advisory group which will benefit clients in a wide variety of industries.”

Bob Kipps, the managing director and co-founder of KippsDeSanto said, “All of KippsDeSanto's 30 professionals are excited to support Capital One's thrust into middle market M&A. With Capital One, a top 10 U.S. Commercial Bank, we found an innovative, technology savvy financial institution with a similar culture and business values.”

He added, “Moreover, we see enormous synergy and growth potential with their capital markets products, expanded private equity and corporate relationships and industry knowledge in aerospace and defense and other key verticals.”

Further, KippsDeSanto’s other managing director, Kevin DeSanto, stated, “Joining Capital One was a natural next step in the growth plan for us at KippsDeSanto. Beyond the M&A advice we currently offer, our clients will now have access to additional solutions offered by Capital One.”

Notably, Capital One’s strategic decisions have been helping it counter economic challenges and continue to support profitability. The company has been undertaking restructuring efforts as part of its initiative to focus on profitable ventures. Over the past year, the company has sold its trust and asset management business, its first and second lien mortgages, and retail brokerage accounts. These initiatives are expected to help Capital One in strengthening its financials and focusing on core operations.

Shares of Capital One have gained 6% over the past six months, underperforming 8.4% growth recorded by the industry.

Currently, the stock carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are TriplePoint Venture Growth BDC Corp. TPVG, T. Rowe Price Group, Inc. TROW and Gladstone Investment Corporation GAIN.

T. Rowe Price’s earnings estimates for 2019 have moved 3.9% upward over the past 60 days. The stock has gained 18.7% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, TriplePoint has witnessed an upward earnings estimate revision of 1.2% for the current year. The stock has gained around 49.8% so far this year. It currently carries a Zacks Rank #2 (Buy).

Gladstone Investment’s Zacks Consensus Estimate for earnings for the current fiscal year has been revised 6.2% upward over the past 60 days. The stock has gained nearly 23.1% so far this year. It currently carries a Zacks Rank #2.

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