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Ladenburg Execs Call SAI Acquisition a ‘Transformational Event’

In an annual letter to shareholders released Friday, chairman of the board Dr. Phillip Frost and President and CEO Richard Lampen said the firm’s acquisition of Securities America, announced in August, was a “transformational event”:

In terms of growth, the transaction will triple our existing base of revenue from $220 million for the 12 months ended June 30, 2011 to approximately $675 million of revenue on a pro forma basis for the same period. But it is also transformational in terms of our position in the industry – making us one of the leaders in the independent brokerage space. Upon closing, our independent firms together will have about 2,700 advisors and $70 billion of client assets, making us one of the industry’s largest independent brokerage networks.

The letter also stressed the appeal of the independent brokerage space and the segment’s potential for future growth:

Driven in large part by demographic trends, the independent brokerage channel has expanded significantly over the past decade, and the future looks equally bright. The greying of America, the retirement of the baby boomer generation and the increasing responsibility of individuals to plan for their own retirement have created tremendous demand for the unbiased financial advice provided by financial advisors in the independent channel.

The letter hinted that this would lead to future IBD acquisitions for Ladenburg, saying that they’ve now reached the scale where they can make the investment to become the industry leader in technology and practice management and development:

It is worth noting that our commitment to growth in the independent brokerage business is without equal. Of the past six major announced acquisitions in our industry (Investacorp, Triad, ING’s independent business, H.D. Vest, Securities America and First Allied), Ladenburg was the acquirer in three of the transactions. The other three acquirers were private equity firms.

But the firm is not seeking to buy firms so that it can achieve scale and shift to a self-clearing platform; Ladenburg will remain with its current clearing firms, the letter said. Plus it’s keeping all its IBD units operating independently. Given this approach to running and acquiring firms, Ladenburg is definitely one to watch going forward.

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