Ladenburg Thalmann Financial Services (LTS) said Wednesday that it had agreed to acquire Securities America from Ameriprise Financial (AMP) for $150 million in cash in a deal that the company said should close by year-end 2011.
In addition to the initial cash payment, Ladenburg Thalmann said in a news release that it may make additional cash payments to Ameriprise should “certain performance targets” be met by the independent broker-dealer during 2012 and 2013.
In a joint interview, Ladenburg President and CEO Richard Lampen said those targets had to do with “certain growth metrics” from Securities America, while Securities America President Jim Nagengast (left) said that he and his senior management team will remain with the Omaha-based firm after the transaction, and that the news of the acquisition had been “extremely well received” by both Securities America representatives and employees.
“The most important thing” to Securities America management, Nagengast said, was that there would be “no disruption to our advisors. We’ve achieved that, and more,” while noting that with the acquisition, Securities America will be aligned with a “strong business partner that understands the independent space” and that has a “commitment to our advisors and to our leadership.”
As for Ladenburg’s interest in Securites America and its 1,700 reps, Lampen said that “in April, when we learned one of the elite companies in the business had become available, we jumped on it,” calling the acquisition a “great growth opportunity.” He promised that Securities America would be run as a stand-alone business, similar to the way Ladenburg runs its two existing IBDs, Triad Advisors and Investacorp.
“The real success we’ve had” with those broker-dealers, he said, is that they are “standalone companies with their own cultures, run by their own longstanding management teams,” and pledged to “continue to support” that approach once the Securities America deal is finalized.
Lampen also said Ladenburg was impressed by Securities America’s capabilities, particularly in technology and practice management, that could collectively benefit its other BDs, while Nagengast said a benefit to Securities America reps would be gaining access to Ladenburg’s and its existing BDs’ strengths in advisor-friendly trust services, investment products and asset-management expertise.
Ladenburg’s commitment to the independent advice space, said Lampen, is evidenced by the fact that “Ladenburg has done three of the five biggest acquisitions in the space,” and suggested that growth in that space will continue over the next five years.
Motives for the Deal; Next Steps
Philip Palaveev (left), who studied the independent broker-dealer community in his days as a consultant at Moss Adams and who is now president of Fusion Advisor Network, called the acquisition “not a normal strategic move” that was “forced by the disaster” of Securities America’s private placement woes. The “massive amount of the settlement” resulting from the sale of fraudulent Reg D securities “forced Ameriprise to sell; this was borne out of necessity” and represented “the best deal they could find, not necessarily the best strategic move for the firm.”