RJ boss on MK deal: Right fit, right time
Reilly says he preferred internal growth but was swayed by similarity in culture between two firms
Raymond James’ $1.2 billion acquisition of Morgan Keegan & Co. Inc., which closed in April, was not one that the company’s boss executive initially favored.
“We prefer internal growth, not acquisition,” said Paul Reilly, chief executive of Raymond James Financial Services Inc. “But this was an opportunity to add a firm that was very close to Raymond James in culture.”
Mr. Reilly, speaking at a press session Wednesday at the firm’s national conference in Orlando, Fla., addressed why the Morgan Keegan deal garnered so much attention in the press and the securities industry itself. “A billion-dollar acquisition is not usually a big acquisition,” he granted. “But no one else is doing any right now.”
Mr. Reilly said that deal bolsters Raymond James’ municipal-finance department, which will make available a much wider array of tax-free municipal bonds to the firm’s high-net-worth clients across all distribution channels.
Some elements of Morgan Keegan’s technology, particularly its client reporting tools, will be added to the overall Raymond James offering, he said.
Mr. Reilly said his company used to benchmark itself against other regional firms in terms of adviser technology but now compares itself to such technology leaders as Fidelity Investments and The Charles Schwab Corp.
He also noted that the addition of some 1,000 Morgan Keegan reps will allow the firm to amortize its growing technology spending over a wider adviser base, allowing all Raymond James advises, whatever their channel, to benefit from increased technology spending.
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