Securities America Inc. has made a splash in the roiling mergers and acquisitions market for independent broker-dealers, and it could make more waves soon.
The independent-broker-dealer subsidiary of Ameriprise Financial Inc. of Minneapolis said last Tuesday that it would acquire Brecek & Young Advisors Inc. of Folsom, Calif.
Brecek & Young is a midsize independent broker-dealer with more than 300 affiliated representatives and $42.7 million in gross revenue. It has more than $1.3 billion in fee-based assets under management.
And Securities America chairman and chief executive Steve McWhorter sees more prospects in the M&A market.
"There's lots of opportunity," he said. And that involves broker-dealers "of all different sizes and shapes," Mr. McWhorter said.
The cost and pressure of compliance, along with the race to keep up with technology, is pushing broker-dealers to consider selling out, he said.
"It's harder and harder for broker-dealers to compete in the independent world," Mr. McWhorter said. "The bar keeps getting higher."
Mr. McWhorter added that "Ameriprise strongly supports our growth strategy."
Securities America's acquisition of Brecek & Young is scheduled to be completed by the end of the year and is subject to the approval of regulators. Terms of the deal weren't disclosed.
Last Tuesday, Chris Ranney, Brecek & Young's chief executive, told advisers in an e-mail that Securities America was buying the firm.
"We share an enthusiasm about the many opportunities that this acquisition will provide Brecek & Young's financial advisers and our associates," he wrote.
"There's a great cultural fit here," Mr. McWhorter said. Both firms "share a rep-centric" point of view in putting advisers first, he said.
Securities America will keep Brecek & Young's Folsom and Cincinnati offices, and Mr. Ranney will report to Mr. McWhorter.
Securities America has 1,750 affiliated reps and produced $506.1 million in gross revenue last year, so the acquisition of Brecek & Young increases the firm's gross revenue by almost 10%.
"Securities America is focused on growth, and they'll probably do more acquisitions like this," said Jodie Papike, vice president of Cross-Search, a Jamul, Calif., recruiting firm for independent reps and executives.
Keeping the two Brecek & Young offices and the same people working in the back offices is key to keeping advisers happy, she said.
For Brecek & Young, this is the second time in four years it has changed hands. In 2004, life insurance company Security Benefit Corp. of Topeka, Kan., acquired the firm.
Securities America of La Vista, Neb., recently has been eager to make such an acquisition but until now hasn't pulled off a deal.
Now, Securities America joins LPL Financial of Boston, Ladenburg Thalmann Financial Services Inc. of Miami and Advanced Equities Financial Corp. of Chicago as a big player in the market.
The market for broker-dealer acquisitions has been hot this summer. On July 10, Ladenburg Thalmann reached an agreement to acquire Triad Advisors Inc. of Norcross, Ga. If Triad hits certain profit targets, the deal could be worth $42 million in cash and stock.
Triad produced $59.4 million in gross revenue last year.
On July 14, First Allied Securities Inc. of San Diego said that it had paid Red Bank, N.J.-based First Montauk Securities Corp. a $250,000 advance to pick up the latter's 180 independent reps and advisers. They are on pace to generate $24 million in fees and commissions this year.
In the wake of those deals, industry observers said more were on the horizon (
InvestmentNews, July 21).
E-mail Bruce Kelly at [email protected].
