Raymond James sizing up Morgan Keegan

COO Helck says for-sale firm would be 'great strategic fit,' but worries about overlap; will pick up firm's advisers if things unravel

By Andrew Osterland

Sep 22, 2011 @ 3:42 pm (Updated 8:34 am) EST

If management at Regions Financial Corp. can't get the price it wants for brokerage Morgan Keegan & Co. Inc., one option might be to consider shopping the retail advisory business separately from the rest of the company. If that proves to be the case, Raymond James Financial Inc., for one, would be interested.

“I have great respect for Morgan Keegan,” said Chet Helck, chief operating officer of Raymond James and head of the firm's private-client-services unit. “It would be a great strategic fit with our firm, but it has a lot of overlap on the fixed-income side of the business. We have some of the same businesses and clients on that side of things.”

Mr. Helck is aiming to increase revenue 15% annually at the private-client business at Raymond James, and the firm traditionally has pursued it in a conservative manner. “We expect an average growth of 5% from the markets, 5% from attracting new advisers to the firm and 5% from growing our existing advisers' practices,” he said.

The firm's acquisition activities have tended to be on the small side. For example, the publicly traded company purchased Howe Barnes Hoefer & Arnett Inc. and its 20-odd advisers this year. Adding the more than 1,200 Morgan Keegan advisers to Raymond James would be a transformative event for the firm.

“If you're a private-equity investor and you buy Morgan Keegan, it's all new business. But when you're a strategic buyer, you have to consider how much overlap there is and how much of it you'll have to eliminate,” Mr. Helck said. “You have to justify the price you're willing to pay considering those costs, too. As a fiscally conservative managed company, we're not going to overpay for something because we like it.”

Splitting Morgan Keegan in two would be difficult to execute, said Bobby Allison, head of recruiting firm Allison Consulting Group Inc. “The fixed-income product from the investment banking side is big for the retail advisers. It would be difficult to split the two,” he said. “It could be done, but I think it's more likely that the firm stays together.

Whatever the outcome of the Morgan Keegan situation, Raymond James is interested in the firm's advisers. “If it doesn't turn out well, I expect we would get a lot of people from there,” Mr. Helck said. “Our culture is a good fit.”