Midsize and small broker-dealer mergers and acquisitions continue at a steady pace as Wunderlich Securities of Memphis Wednesday said it was acquiring the wealth management assets of Dominick & Dominick, a privately held firm in New York.
“There are currently 210 financial advisers at Wunderlich,” said spokeswoman Kathy Ridley. “The break down is 165 in-house and 45 independent affiliates. With the expected addition of 44 Dominick & Dominick advisers and other growth, the total headcount should be above 250 when the acquisition closes in January 2015.”
Terms of the acquisition were not disclosed.
The Wunderlich transaction comes on the heels of several such deals in the past few months and the trend is likely to continue, noted one industry recruiter.
“Barring some sort of major market correction, I believe the M&A trend for small to mid-sized IBDs will continue for some time,” said Bradley Fay, president of IBDSearch. “Recruiting is not getting easier and firms are offering very aggressive economic terms for producers here in 2014 and still falling behind their business development goals.”
SHRINKING INDUSTRY
A shrinking brokerage industry is pushing firms to seek out mergers in order to grow, Mr. Fay said.
“The pool of BDs keeps getting smaller,” he said, adding that “in 2008, there were about 5,000 Finra member firms and now there are 4,100. In 2008, there were over 670,000 registered reps and now there are less than 630,000.”
“That's nearly 1,000 firms and 40,000 registered reps gone,” Mr. Fay said. “All firms want to grow and, with materially less producers out there, many have decided that acquiring small to mid-sized firms is the way to go.”
The pace of similar deals for small and mid-sized broker-dealers has been steady the past few months. Three firms, RCS Capital Corp.,
LPL Financial, and Ladenburg Thalmann Financial Services, have spurred the acquisitions.
Ladenburg Thalmann last month said it had agreed to buy Securities Service Network Inc., which has close to 450 independent reps and advisers. In August, Ladenburg said it was buying KMS Financial Services Inc., with 325 reps and advisers.
In July,
LPL Financial said it had reached an agreement to buy the assets of independent broker-dealer Financial Telesis Inc., with 470 registered representatives.
In August, RCS Capital Corp. said it had agreed to buy two independent firms: Girard Securities Inc., with 250 reps and advisers, and VSR Financial Services Inc., with 264.
Also over the summer, one of Ladenburg Thalmann's subsidiary broker-dealers, Securities America Inc., said it was acquiring the assets of Sunset Financial Services Inc., which has 268 reps. The sales force of Sunset Financial consists primarily of insurance agents of Kansas City Life, according to a Securities and Exchange Commission filing. Kansas City Life was the former owner of Sunset Financial.
