MDN: CEO: Wunderlich Acquisition ‘A Good Thing for Memphis’
In providing context for his firm’s pending acquisition by a Los Angeles-based financial services firm, Wunderlich Securities Inc. CEO Gary Wunderlich explained that “there’s been a ton of consolidation in our industry,” and that “size and scale matter.”
That helps explain why his Memphis-based firm, founded in 1996 and which generated $116.9 million in revenue over the 12-month period ended March 31, has agreed to sell itself to B. Riley Financial in a $67 million deal expected to close in June. Once the deal closes, the combined entity will have about $11 billion in assets under administration, with 25 offices across the U.S.
Wunderlich will remain as the top executive at Wunderlich Securities –which is retaining its brand – and he will join B. Riley’s board upon closing of the deal.
“At the same time on our end, nothing changes. Our clients’ advisers stay the same, our name stays the same.”
The combined organization will provide research coverage of more than 700 companies across a range of industries. The firm will also include a significant asset valuation and disposition business, as well as a business that specializes in providing complex restructuring solutions.
To Wunderlich’s point about consolidation, a B. Riley presentation prepared for investors also strikes that same note, explaining how the industry has seen “significant consolidation” of small and mid-sized broker deals. As of April, according to the firm, there were 3,813 broker-dealers versus 4,289 in 2012.
Wunderlich says the acquisition will prove to be a positive for Memphis.
“From a Memphis perspective, which is where I’m really excited, we’re a Memphis-headquartered firm, and our headquarters will remain in Memphis,” he said. “They’ve made a commitment to continue to investment in the wealth management business, which inherently means over time I think our headcount here in Memphis will grow. So it’s a good thing in Memphis, from an employment standpoint. We also have an operational advantage, being here in Memphis, because it’s a very affordable place to live. And we have a deep talent pool in our industry that lives here.”
The formal move toward an acquisition got started a few months ago, born out of informal talks between both firms’ leadership about looking for an opportunity, Wunderlich said, to do something together.
Wunderlich stressed that clients won’t see much of a difference in their experience. “I think culturally, it’s a great fit, and it’s a great opportunity for us,” he said.
The transaction is “only additive,” he continued, as Wunderlich’s management, officers and brand will stay the same.
B. Riley chairman and CEO Bryant Riley said other positives that made the deal attractive to his firm are that, in addition to significantly enhancing B. Riley’s wealth management business, “Wunderlich’s brokerage and research franchises strategically align with our current operations and expand our capabilities with minimal overlap of clients and coverage.”