RIA Tag

The Threat to LBO Private Equity-Backed IBD’s

14:06 16 December in Articles Written by Jon Henschen by rafferty

December 13, 2022 By Jon Henschen, WealthManagement.com   Managers of debt-heavy IBDs backed by LBO private equity will need all the skills they can muster to thread the needle of falling revenues and desired growth. Exit strategies may have to wait. While readily working with standard private equity firms focused on growth capital, we made the decision over a year ago to not work with those private investment firms that rely on high levels of debt on the part of portfolio companies to goose returns—namely, leveraged buyout private equity fund managers. In anticipation of difficult markets, we focused on lower debt-to-net capital ratios, while avoiding broker/dealers whose ratios started to push to four times or higher. Similar issues arise with leveraged buyout funds. Debt-to-equity ratios of LBO-backed firms can run up to two times higher than...

BD Deals: When Do Advisors Win, Lose?

23:36 03 November in Articles Written by Jon Henschen by rafferty

November 2, 2022 By Jon Henschen, ThinkAdvisor  When one broker-dealer is bought by another, advisors at the acquired firm hope for the best but wait for what will change. The acquiring broker-dealer will most always start off with a statement such as, “Everything will stay the same.” This may be the case for a month or two; over time, though, this statement often proves to be untrue. The size of the firm being sold and the size of the acquiring firm can make a big difference in the retention of advisors over the first two years. Potential points of conflict tend to be service, compliance and culture misalignment. Why BD Size Matters Here are the main merger scenarios and their likely outcomes: Small BD being sold to another small BD: very favorable to advisors/high retention; ...

Is It The Right Time to Check Out These 4 BD’s?

14:38 21 September in Articles Written by Jon Henschen by rafferty

September 20, 2022 By Jon Henschen, ThinkAdvisor  In the spirit of the show “Comedians in Cars Getting Coffee” — which features Jerry Seinfeld matching a car from his collection with a comedian he’s taking out for coffee — I decided to match up watches with four of my broker-dealer clients. One of my outside interests is watch collecting, specifically watches in the $500-$5,000 price range. And, like with broker dealers and RIAs, I’m continuously seeking out combinations of quality and value in the watch world. I found this pairing exercise to be very revealing in terms of the key qualities that advisors may want to look for in their broker-dealer and in their timepieces. Read on for details on four interesting watches and four BDs, all of which I keep up with and are part of my...