Piper Jaffray brokers are voicing few complaints about the proposed sale of the firm to U.S. Bancorp. Most seem relieved that the faltering firm will wind up in the arms of another Minneapolis financial services company.
"Without a doubt, it's unanimous," says Brad Fisher, a Piper branch manager in Kennewick, Wash. "Everyone's encouraged about this marriage."
Fans see it as a good fit culturally, financially and productwise. "When I heard it was U.S. Bancorp, I was very happy because I know that they're our friends," says Jay Larson, a Piper branch manager in Fresno, Calif. "When you look at their mission statement, it matches up very well with ours."
Piper brokers are eager to start pitching clients the extra services they see coming from the marriage. Those include mortgage products, auto loans and other items from the liability side, as well as U.S. Bancorp's well-regarded trust services and its First American family of funds. "This is something we can't wait to expose to our client base," says Fisher.
Not everybody's completely pleased with the deal. Some brokers fear changes in management style when the firm becomes U.S. Bancorp Piper Jaffray, with Chairman Addison Piper reporting to U.S. Bancorp President and CEO John Grundhofer. Others criticize two-year employment contracts and fat incentives reportedly handed out to management. At press time, rumors were circulating that Piper reps would be paid retention bonuses. According to one source, reps who produce more than $370,000 would receive set dollar amounts starting at $50,000.
But the overwhelming feeling among Piper brokers is relief. "It's the inevitability," explains Appleton, Wis., broker Cyril Wolff, a 25-year veteran. "Three to five years down the road, I don't think there are going to be any freestanding brokerages left. We're very fortunate that we kind of got to choose because, as you go down the road, the matches may not be quite as good."
Piper was in a worse position to choose than many. The $130 million it finished paying last year to settle lawsuits resulting from derivatives losses had weakened it. And last year, it was below industry averages in sales growth and profits, according to Hoover's corporate profiles, with 8.7% sales growth, and net income of just $1 million on $600 million in revenue (the firm took a $30 million charge). U.S. Bancorp's $55 billion in assets will provide the financial strength to let Piper add the technological and other resources it had to have to compete, brokers say.
The deal isn't set to close until the second quarter of 1998 and Wolff points out that with Piper employees holding 60% of the brokerage's stock, the 1,200 brokers among Piper's 3,300 employees will have a lot of say about whether U.S. Bancorp passes muster. "If you had a suitor that the employees en masse didn't like," he says, "it would never happen."