Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Broker Dealers

Hard Time for BDs on the Block to Find Suitors

Your article was successfully shared with the contacts you provided.

While rumors persist about possible suitors for Securities America, Morgan Keegan and other broker-dealers on the market, experts say the pool of buyers has shrunk dramatically over the past few years. For advisors, the longer the sales process take, the more likely it is that advisors will leave, they add.

“There are fewer buyers out there right now,” said Jon Henschen, head of Henschen & Associates, a recruiting firm for independent advisors in Marine on St. Croix, Minn., in an interview. “There are just not many insurance firms looking for brokers, for instance, since many of them have gotten out of this business.”

This leaves private-equity and venture-capital firms as the primary group of buyers right now, Henschen says. “But the name of the game when you sell a firm is retention,” he explained.

Despite the poor market for broker dealers, the recruiter says Ladenburg Thalmann appears to be at the top of the list of potential suitors for Securities America, which has about 1,800 reps but some lingering legal issues surrounding its sale of private placements. Ladenburg Thalmann is the parent company of two independent broker-dealers: Triad Advisors in Norcross, Ga., with some 600 FAs, and Investacorp, in Miami Lakes, Fla., which has about 500 advisors.

“I’m thinking that Ladenburg Thalmann is probably turning over all the stones to check on potential liability,” said Henschen. “There’s also the issue of whether or not it should bring on Securities America as a stand-alone entity or merge it with Triad. But that [merger] could be an overwhelming task for Triad, since Securities America has so many reps.”

Securities America, which was put up for sale by Ameriprise Financial in late April after the parent company agreed to a tentative $150 million legal settlement with investors, says it cannot comment on its sale process. Calls to Ladenburg Thalmann were not returned.

Morgan Keegan, which has about 1,200 employee advisors, and its parent company Regions Financial, recently agreed to a $210 million settlement with investors regarding the sale of certain Helios funds. A separate dispute concerning the sale of some $2.2 billion of auction-rate securities was dismissed by a judge in Atlanta in the past month or so, though the SEC says it is considering an appeal.

“It looks like the Morgan Keegan issues are better contained than the Securities America issues, which makes it more likely that Morgan Keegan could get through the [sales] process” before Securities America does, said Bill McGovern, head of B/D Search, a recruiting firm in St. Petersburg, Fla.  Still, while its legal issues may be more limited than those facing other broker-dealers now being shopped, Morgan Keegan doesn’t have an extensive list of possible suitors.

“It is the old-school captive model, with more commissions than fees,” said Chip Roame of Tiburon Strategic Advisors, a consulting firm based in Northern California. “This makes such a deal a backwards step for any progressive [independent-advisor] firms. Plus, Morgan King brings with it an investment bank that is regionally focused. Again, it’s not exactly a fit for many broker-dealers.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.