NEXT Financial Seen as Ripe for Schorsch’s Next Big Buy

Industry experts say there’s plenty of chatter in the independent broker-dealer space about the likelihood that NEXT Financial is next on the “to buy” list of real-estate mogul Nicholas Schorsch.

Schorsch leads RCS Capital Corp., which just gobbled up independent broker-dealer Investor’s Capital (ICH), and American Realty Capital, which recently announced plans to buy Cole Real Estate Investments.  

“I spoke with someone at another IBD who was in touch with at least one [advisor] at NEXT who had mentioned the possibility of NEXT being purchased” by one of Schorsch’s firms, said Jon Henschen, president of the recruiting firm Henschen & Associates.

In September, Larry Roth — formerly head of the AIG-owned Advisor Group of IBDs — became president and CEO of Realty Capital Securities (RCS), owned by Schorsch’s RCAP Holdings. This executive appointment was made on the heels of RCAP’s purchase of another IBD, First Allied Securities, from Lovell Minnick Partners.

Talk about a lot of wheeling and dealing.

“I think the fact that Larry Roth went to [RCS to] run the broker-dealer business means we should suspect more deals are in the offering,” said consultant Chip Roame, head of Tiburon Strategic Advisors, in an interview with ThinkAdvisor.

“First Allied and Investor’s Capital got them about 2,000 reps,” Roame added. “It seems to me that they need more [reps] to have the expected impact.”

(RCAP declined to comment on the matter, and NEXT Financial did not return calls as of publication time.)

IBD Movement

Recruiters in the independent broker-dealer space say they have seen advisor movement out of NEXT, a rep-owned IBD, over the past year, as well as earlier.

This industry conjecture that NEXT was a ripe target began about two weeks ago, Henschen says, while “poaching” of its reps has been fairly aggressive for the past year. “NEXT’s sale makes sense,” the recruiter said, “as I believe the IBD is in need of capital.”