Private Equity Still On The Acquisition Trail...But It's A Buyer's Market

Thursday, January 05, 2012 11:59
Private Equity Still On The Acquisition Trail...But It's A Buyer's Market

Tags: broker-dealers

While big broker-dealers on the block are having trouble keeping bidders at the table and smaller ones in trouble are simply shutting down, private equity funds are still finding a "sweet spot" for acquisitions in between.

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COR Securities Holdings has committed to pay up to $30 million in two separate transactions: one giving it a big slice of the parent of 700-advisor National Securities Corp., the other buying small clearing firm Legent Clearing outright.


In an environment where small firms are simply shutting down because they can't find buyers or financing, this is a good sign that hope is out there.


But for bigger firms like Morgan Keegan, the bidders seem painfully thin on the ground after an earlier private equity rescue fell through.


The moral is clear. There are still exit opportunities for broker-dealers and RIA firms alike, but right now, negotiating power is definitely in the hands of the buyers, not the would-be sellers.


That means anyone who wants to sell -- now or in the future -- should be working to make the business as attractive as possible to potential acquirers.


And those who want to buy a rival can find plenty of opportunities to expand, so they can afford to be choosy. Don't just buy AUM at a discount. Look for ways to grow strategically by bringing on more expertise and functionality.






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