Good things may yet come to those who wait — at least for managers and financial advisers at Morgan Keegan & Co. Inc.
The 1,200 or so brokers working for the Memphis, Tenn.-based brokerage have been waiting six months to see what firm The Goldman Sachs Group Inc. ultimately lined up to buy the B-D, which was put on the block by parent Regions Financial Corp. in June.
According to Bloomberg, that buyer is likely to be Raymond James Financial Inc., which is reportedly about to pay up as much as $930 million for Morgan Keegan. On top of that, Regions will receive a $250 million special dividend from Raymond James, a “person with knowledge of the talks [between the companies]” told Bloomberg.
If correct, that figure would work out to more than $980,000 per adviser. “If that price is just for the advisory business, it strikes me as high,” said recruiter Danny Sarch, president of Leitner Sarch Consultants Ltd. Mr. Sarch noted that if Raymond James does acquire Morgan Keegan, it will also have to pay the B-D's top brokers to stay with the firm.
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St. Petersburg, Fla.-based Raymond James may be the best strategic buyer for the firm from the point of view of advisers, according to recruiters. For one thing, the company has its headquarters in the South. It also has both an employee and an independent channel for advisers — though it is uncertain if the RJ will offer Morgan Keegan brokers that choice.
Anthea Penrose, a spokeswomen for Raymond James, was not immediately available for comment. As of press time, a spokesperson for Regions had not returned a call seeking comment.
Wells Fargo & Co. and Stifel Financial Corp. also were said to be in the running to acquire Morgan Keegan. But one analyst noted: “Culturally, I think that Raymond James and Morgan Keegan fit well together, and it's a nice opportunity for Raymond James.” The analyst, who asked not be identified, added: “There is overlap in support functions between the two firms, and a big question is whether Raymond James is going to keep more jobs in Memphis and at the firm to keep people happy.”
At the end of the day, however, the retention deal will be what matters most to advisers, and Raymond James will have to come up with more money to keep them in their seats.
“The first reaction of brokers in any transaction is, ‘What's in it for me?'” said Rick Peterson, who runs a recruiting firm in Houston. He has been speaking with numerous Morgan Keegan advisers about job opportunities elsewhere. “The price to retain advisers has gone up in the last six months. Any adviser making more than $500,000 now knows they can get a solid deal from seven to nine firms in the market.”
