Ladenburg Thalmann Possible Buyer in Securities America Sale
by Diana Britton and featured in Registered Rep
June, 2011:
Ladenburg Thalmann, parent company of Triad Advisors and Investacorp, has emerged as a potential buyer of Securities America, which Ameriprise Financial (NYSE: AMP) announced plans to sell in late April, according to several industry sources. One industry recruiter, who declined to be named, told Registered Rep. that people inside Securities America have named Ladenburg as a potential bidder. Another industry source, who preferred to remain anonymous, said Securities America reps were being told to stay put as Triad Advisors has put in a bid. Other sources said that Ladenburg has been on the acquisition trail and that a purchase of Securities America would make a lot of sense for the financial services firm.
Natalie Hadley, spokeswoman for Securities America, said she hadn’t heard the names of any potential bidders and that if names had been discussed, the firm wouldn’t be able to confirm them as Ameriprise is publicly traded. Richard Lampen, president of Ladenburg Thalmann Financial Services, did not return a call seeking comment.
Jonathan Henschen, a recruiter with Henschen & Associates, said he was expecting Ladenburg to be a primary candidate to purchase Securities America because the firm has been aggressively shopping for b/ds. In fact, Henschen heard from one IBD that Ladenburg has been sending letters to firms that had not announced any intention to sell, saying that if the firm is interested in finding a buyer, to contact Ladenburg.
Ladenburg would make a reasonable buyer for Securities America, as the firm has deep pockets and didn’t have any exposure to the alternative investments plaguing IBDs including Securities America, Henschen added.
Philip Palaveev, president of Fusion Advisor Network, said Ladenburg has been one of the most active acquirers in the IBD space in the last three years. Other recent active acquirers include independent broker/dealer LPL Financial (NASDAQ: LPLA), private equity firm Lightyear Capital, privately held financial services company Securian Financial Services and Securities America itself.
Scott Smith, senior analyst with Cerulli Associates, said that because Ladenburg already has other b/ds operating under it, it could be a smooth transition to add Securities America to the mix. Securities America is already run as an independent operation, so the firm is not looking for a huge amount of support from a parent company, he added. Smith sees it as a good match, one that wouldn’t encroach on the independence of Securities America’s advisors.
But Securities America’s advisors would need assurances that operations would continue as before, and sometimes those promises can backslide over time, Smith said. With Triad at about 450 reps and Investacorp at about 400, extending the plumbing to Securities America’s 1,900 reps wouldn’t be too much of a stretch, he said.
“The question comes down to retention,” Smith said.
According to Henschen, Securities America has been losing a lot of advisors since Ameriprise announced its plans to sell the unit. Some firms, such as LPL, have been ramping up their recruiting deals for Securities America reps, offering as much as 35 percent of their trailing 12-months production, he added. This is often a better deal than a retention bonus.
On June 13, Securities America started enforcing a 30-day wait period for reps that want to leave the firm, Henschen said. Most b/ds require 30-day notice in reps’ contracts, but rarely enforce it, Henschen and another recruiter said. This is likely an act of desperation to keep assets at Securities America for the sale of the firm, Henschen said.
While some SAI advisors have left, the recruiter said another wave of reps is likely to leave in the next couple weeks. Because Amerprise announced the sale of Securities America at the end of April, this gave many advisors time to plan a move, she said.
Whoever ends up buying Securities America will likely pay out a small percentage up front, then the rest of the purchase will be paid out over the next couple years based on how many advisors are retained, Henschen added. “They’re only going to pay for what sticks.”
Ladenburg has historically left the b/ds it has purchased alone, and it wouldn’t likely roll Securities America up into Triad, the recruiter said.