Is First Allied Securities Splitting With Its Corporate Parent?

Friday, August 19, 2011 07:06
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Is First Allied Securities Splitting With Its Corporate Parent?

Tags: breakaway brokers | broker-dealers | independent broker-dealers

Management at one of the biggest independent broker-dealers out there is reportedly talking about buying the company from its current owners.

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San Diego's First Allied Securities seems to be discussing a spinout from corporate parent Advanced Equities, Financial Planning has discovered.

 

The deal as currently contemplated would give control of First Allied to president Adam Antoniades and other executives.

 

No cash value is on the table yet. If this were a normal industry environment, we might expect to see the price of corporate independence climb to around $750 million -- three times trailing revenue.

 

However, given what we've seen from Securities America in the last week, the final price tag could be a lot lower.

 

First Allied built its brand on Advanced Equities' reputation as a player in the private equity markets. The company now has about 1,000 independent reps on its rolls managing roughly $30 billion in total.

 

The remarkable thing in these numbers is that despite First Allied's expertise in normally expensive "alternative" asset classes, it is still only generating about 0.76% of AUM in commissions and fees.

 

Losing First Allied will leave Advanced Equities in an unclear position when it comes to brokerage sales. On the one hand, it has a separate wealth management unit built on the old Greenbook Financial Services, which AE acquired in 2006.

 

But that unit's growth seems to have stalled. All total, Advanced Equities currently counts fewer advisors under its umbrella than currently work at First Allied alone. 

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