In a downturn, some firms scramble to get out of the business. Case in point: The sale of CIBC Oppenheimer's retail brokerage and asset management business to New York-based Fahnestock Viner Holdings, for $257 million. Some industry executives were a bit surprised that the firm, which operates in 18 states, was the acquirer; the deal will give Fahnestock's brokerage arm about 1,700 brokers in more than 100 offices in the U.S.
Firm President Elaine Roberts says there are no plans for broker layoffs. She wouldn't discuss whether the firm plans to expand through further acquisitions or what kind of footprint around the country it wants to have.
The firm's 1,100 brokers currently work in 18 states; CIBC's producers operate in 17 different branches, concentrated in large metropolitan areas. The deal gives Fahnestock a presence in Chicago, Washington, and Seattle, which it did not have before.
The firm is going to change its name to Oppenheimer once the deal is finalized in mid-January. “It could be an interesting niche,” says one Oppenheimer producer. “They've figured out how to knit smaller firms together and make money, which banks were never able to do.” The company reported a profit of $1.7 million, or 14 cents a share, for the third quarter of 2002, but in its earnings release warned that costs from previous acquisitions — including the 2001 acquisition of Josephthal — would continue to hurt profits.
“All of the hoopla that came with the CIBC I.D. went out the window, so if some of the brokers at Oppenheimer bought into the synergies out of that union, they got nothing out of it,” says one recruiter.
Industry sources say retention packages were rumored to be strong, although they weren't scheduled to be presented to brokers until Dec. 31, after Registered Rep. went to press. Roberts says that retention packages have not been finalized and couldn't comment on what they might contain.