Regions Financial Corp. is trying to find a buyer for Morgan Keegan, but the clock is ticking, and the longer it takes, the greater the likelihood that its most valuable asset, the advisor reps, will leave, thereby reducing the value, and making a sale unlikely to happen at all, according to Andrew Osterand’s InvestmentNews article entitled “Morgan Keegan’s 1,200 reps are waiting to see if parent bank Regions can find a buyer.”
Overtures from executive recruiters have apparently already started. “We can’t call a broker who hasn’t already been contacted by three other recruiters by now,” executive recruiter Rick Peterson was quoted as saying, adding: “I think very few of them will move until they find out who the buyer is and what the deal will be to stay where they are.”
How long will the reps wait, and how will they react to a new owner and a new deal if one is forthcoming?
“When you have a wealth management franchise on the block, you want to find a buyer quickly or the advisers will start to leave,” one industry consultant was quoted as saying, adding: “Uncertainty is never good for wealth management firms.”
Wells Fargo & Co. is a likely acquirer, according to the article, having acquired several wealth management operations, including Wachovia Securities.
But Morgan Keegan advisors may react negatively to an overture from Wells Fargo, as many of them came to smaller Morgan Keegan to escape large firm culture.
Other potential buyers, according to the article, are RBC Capital Markets, whose parent company just sold its U.S. retail-banking operations and may be looking to expand its wealth management operations; Raymond James Financial Inc., which has a small-firm culture with large-firm resources and delivery system; Southwest Securities Inc., a Dallas-based firm; and BB&T Corp., which owns Scott & Stringfellow Inc., a regional brokerage firm with a culture similar to Morgan Keegan’s.
Or, these firms may try to pick off the firm’s top producers one by one, and with Morgan Keegan still facing numerous individual-investor claims over its RMK bond mutual funds, the latter strategy may be more appealing, according to the article.
A change of control of a business organization, or a change employment status, may be produce legal issues that should be examined by an experienced attorney.
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