Who is next?..predictions

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May 31, 2007 11:20 pm

My prediction is that opco goes to RBC Dain.  UBS sells its brokerage division to CITI and that EDJ and SF get gobbled up by year end.  In <3 years there wil be 4-5 major firms and bunch of independents.  No "mid-sized" firms can/will survive!  FA's doing less than $500M will be quickly squeezed out!

May 31, 2007 11:34 pm

i believe mid size firms can survive. they are profitable. the problem is when you are offered 3.7 times book( i think that what age is being bought at), how do you not do it? then you get a retention bonus to stay?. look at when merril bought advest. they could not have made money off that deal. there have been so few brokers to make it in the last 7 years that these companies are desparate to grow and need to buy to do it. AGE refused to pay upfront money and that is what killed them. most offices had one or two large producers and a bunch of 200k producers. the 200k producers were profitable there but will have to join up with someone to survive the wirehouse. i also heard they are change the name to......


wachoviaprudentialcorestatesfirstunionwheatfirstevernkemperi nterstatejohnsonlaneageedwardssecurites


now that is a mouthful

Jun 1, 2007 8:25 am

My prediction is Merril...by a bank

Jun 1, 2007 10:17 am

LPL buys RJFS! Just a rumor so far!  


The private equity firm that owns a large percentage of LPL also owns a large position at RJ.


Don't get me wrong I would not favor this deal but I am still indy and if I do not like it I can leave. LPL would not have any hold on my clients! Still a huge hassle to move a book  


Jun 1, 2007 10:43 am
bankrep1:

My prediction is Merril...by a bank



Who knows, since that rumor is at least 20 years old. Then again, I doubt it.

Jun 1, 2007 10:48 am

I think Jimmy W. will convince the GPs that they can be so much richer is they'll sell out to Merrill.  What a deal.  The GPs make the money and the working stiffs get stiffed.  BOHICA!!

Jun 1, 2007 11:07 am

Would anyone actually want EJ's "unique" model?

Jun 1, 2007 11:22 am

The Chinese...they don't have cars..so doorknocking would be very suitable.

Jun 1, 2007 11:45 am

Greenbacks:

LPL buys RJFS! Just a rumor so far!  


The private equity firm that owns a large percentage of LPL also owns a large position at RJ.


Don't get me wrong I would not favor this deal but I am still indy and if I do not like it I can leave. LPL would not have any hold on my clients! Still a huge hassle to move a book 


I think that would be a huge mistake on LPL's part.  Reps at RJFS are there for a reason...they didn't like what LPL had to offer.  Same goes for reps that chose LPL over RJFS.  If these two merge and the "winner" uses their culture as the standard, the acquiree will lose reps by the boatload.  RJ's annuity haircut was a stupid idea and if LPL adopts stuff like that, I'm gone.

Jun 1, 2007 11:56 am
Dontknow:

Would anyone actually want EJ's "unique" model?



All kidding aside, I doubt it.

Jun 1, 2007 12:08 pm

Gus, with all due respect, I think you're full of beans.  EDJ is unique and not a good fit for any acquirer.  Plus, I seriously doubt they have any desire to be acquired.  Who do you think would swallow them?


...and as far as consolidation, the same thing was said years ago about banks and I see de novo banks springing up all over the place and plenty of mid-size banks still in the hunt.  Some consolidation, yes, but nothing on the order of your prediction.


...and just to be consistent, I also disagree with your small producer prediction.  Plenty of firms have shown a willingness to service even part-time producers if the split is right.

Jun 1, 2007 12:43 pm

If a purchaser came in and tried to change EDJ's model, i.e. put them into branch offices, they would leave by the boatload.  You may not view EDJ reps as independent, but that's how they view themselves, and if a PutTrader clone tried to pretend he was their boss, it would last about a week before the EDJ rep moved to LPL.


The only way for it to work would be if a purchaser wasn't very heavily involved in the financial advice business, and was willing to accept EDJ as is, leaving their system basically untouched.  Come to think of it, that would be a pretty nice payday for the GP's (not that they ever let their interest get ahead of the hardworking IR in the field).


Conspiracy theory aside, I would be shocked in EDJ was acquired by anybody.  Even with the potential payout for GP's, it's not like they are hurting for money, and as Mel Brooks said, "It's good to be the king."  I think they would take their current millions and the power over the potential additional millions but having to answer to a board or directors (or stockholders).

Jun 1, 2007 1:12 pm

I've heard it from the horse's mouth. Jones would be willing to be bought out for 10x book.

Jun 1, 2007 1:59 pm
farotech:

I've heard it from the horse's mouth. Jones would be willing to be bought out for 10x book.


...me too...

Jun 1, 2007 1:59 pm

IMO Piper, RBC, and Oppy seem most likely takeover canidates.


Jun 1, 2007 3:16 pm

On a side note...I've heard serious rumors that Regions Bank will soon be acquired, aka before the year is out.  The two suitors are Citi and Wells Fargo.


Then again, I've heard Wells Fargo was going to buy SunTrust for a few years now...and nothing so far.

Jun 1, 2007 3:20 pm

VD - agree on Oppenheimer - but RBC is too huge (and Canadian, eh), may be looking to eat more US property.  The loonie is at a 30 year high - may be time to spend some C$.

Jun 1, 2007 6:11 pm

The only way Merrill would buy EDJ is if they were looking to grow their call center...

Jun 1, 2007 6:24 pm
apprentice:

VD - agree on Oppenheimer - but RBC is too huge (and Canadian, eh), may be looking to eat more US property.  The loonie is at a 30 year high - may be time to spend some C$.


That's what people thought about Fahnestock whey the bought Oppy. Oppy is domiciled in Canada, by the way.

Jun 1, 2007 9:55 pm
farotech:

I've heard it from the horse's mouth. Jones would be willing to be bought out for 10x book.





And that would be a good price to sell it.



For all it is, EDJ is a creaky old rusty machine, but for the GP's its a pretty good system.



The problem is that EDJ is so leveraged to the sucess of American
Funds. If GFA ends up with the same problems as Fidelity's Magellan
fund did things could get very nasty.