Merrill Lynch is reportedly trying to lure back Chris Birosak, just a week after letting go Jack Yang, co-head of leveraged finance. As first reported on LMW's Web site last week, Birosak would not be coming in as a replacement for Yang. Instead, he would join in an effort to bolster a team that has been whittled down over the past six months. The revolving door at Merrill has some wondering about the firm's commitment to the syndicated finance market. "The firm is going through turmoil," said a banker. "Re-hiring Birosak is an attempt to say Merrill is still committed to syndicated finance, but re-hiring one of five they got rid of seems symbolic." Merrill laid off 16 people -- including Birosak, Chris Johnson, Michael Senft -- from its U.S. leveraged group last November. Matthew Collins, global co-head of leveraged finance, resigned in February. A Merrill spokeswoman did not comment on any effort to bring Birosak back, but said, "Merrill is definitely not de-emphasizing the syndicated finance group."
If Birosak rejoins the firm he was reputedly paid a lot of money to leave, he will pair up with another ex-Merrill employee who left in 1998 and returned this year. Jack Mann, global head of leveraged finance origination, was hired from The Carlyle Group, also to bolster the flagging high-yield operation, and Merrill sources said more hires will be announced in the coming weeks.
While there has been plenty of shuffling in the leveraged loan group, the firm has been ramping up a middle-market lending unit, and is also committing to the CP backstop market, noted one banker. A banker at another shop said he does not see Merrill getting out of the loan business. He said the firm is cutting big salaries, but is actually staffing up on originators.
Still, the bank's loan group has been quiet since last fall. Market players say a changing of the guard at the firm is the reason why. "They [the new management] are not keen to do syndicated finance," since Merrill President Stanley O' Neal announced cost-cuts. Last year, before Sept. 11, Merrill was number eight overall for sponsor-related loans in the U.S. and the number one investment bank, according to Loan Pricing Corporation's tables. Merrill also took the number one position in LBO deals in the U.K., after leading the mammoth Yell deal. However, since then there has been no appetite for risk, according to several bankers. "Aside from Advanced Medical Optics, Merrill has hardly bookrun a loan since last fall," said a rival banker.
A Merrill source attributed the drop in business to the dearth of M&A activity. "The activity right now is refinancings, which the commercial banks dominate, but Merrill provides M&A financing," he noted.