Ladenburg Allocates Up To $70 Million For Follow-Up Securities America Payments Hot

ScottMartinScottMartin  
 
 
0.0 (0)
Write Review

 

Ladenburg Thalmann has confirmed that it will add up to $70 million to its ultimate payout to Ameriprise for buying the broker-dealer.

 

The additional payments will reward Ameriprise if Securities America hits various revenue targets over the next two years.

 

Ladenburg will pay an extra 90% of all interest income Securities America generates above a certain level: $4.5 million next year and $6.5 million in 2013.

 

And it will cough up 21.5% of all gross revenue the firm generates above $440 million and below $520 million next year. Additional revenue beyond that point earns a reward of 18%.

 

In 2013, the gross revenue targets slide up to $475 million and $555 million.

 

Since Securities America was bringing in about $450 million a year as of the acquisition, the lower numbers should be easy enough to hit, but it is unlikely that the full $70 million will ever be paid.
 
Check my math, but it looks like the company will have to grow its revenue to exponential levels for Ameriprise to even seen $35 million of that money.
 
Be that as it may, the deal would still value Securities America at roughly 1/2 annual revenue at the highest payout -- not exactly the traditional three times revenue that the industry often figures is fair.
 

This Website Is For Financial Professionals Only


User reviews

There are no user reviews for this listing.
Already have an account? or Create an account