(Bloomberg) -- Stifel Financial is in discussions to acquire Sterne Agee Group, combining two of the biggest U.S. brokerages outside of New York, according to a person with direct knowledge of the matter.

A deal may be announced within days, said the person, who asked for anonymity because discussions are confidential.

If Stifel acquires Sterne Agee, it would dwarf similar brokerage deals made last year.

Stifel Chief Executive Officer Ron Kruszewski has snapped up firms including KBW and Thomas Weisel Partners Group in the wake of the financial crisis, as shrinking margins and the challenges of adapting to new technology and regulations push brokerages to merge or shutter. Sterne Agee would be giving up its independence after more than doubling its credit trading and sales team in less than four years, and ousting and suing its longtime CEO last year.

A deal with Sterne Agee would follow St. Louis-based Stifel’s $575 million purchase of KBW, which was announced in 2012. Stifel also picked up a bond-trading business in 2013 from Knight Capital Group, which had almost collapsed after its computers generated a flood of errant orders.

MERGER LANDSCAPE

Stifel's acquisition would eclipse two other significant brokerage acquisitions over the past year.

Milwaukee-based Baird acquired McAdams Wright Ragen, closing the deal in July. Through that acquisition, Baird added seven offices in Washington and Oregon and about 85 advisors managing more than $10 billion in assets.

Baird now has more than 800 advisors and more than $125 billion in client assets. When the deal was announced, Baird Paul Purcell, Baird's CEO, said that the two firms had a good cultural fit.

"Taking this important step enables MWR to enhance the services and capabilities it offers its clients, and positions Baird to expand our current footprint in the Pacific Northwest," Purcell said in a statement.

Wunderlich Securities, a regional firm based in Memphis, Tenn., acquired Dominick & Dominick, a New York-based brokerage with offices in Miami and Atlanta. That deal, which closed in January, boosted Wunderlich's total client assets under administration to $10 billion.

CEO Gary Wunderlich said in a statement following closure of the deal that his firm had grown about 20% and added 43 advisors.

"We are pleased to have successfully completed our largest acquisition to date, both in terms of client assets and associates," said Wunderlich.

'WE STABILIZE SITUATIONS'

Turmoil at companies and across the market creates opportunities for acquisitions, Kruszewski told investors at a conference in September.

“We go in and provide stability, provide operational stability and a good culture,” he said. “We stabilize situations.”

When Kruszewski became CEO in 1997, Stifel employed 733 people and had annual revenue of $136 million.

There are now more than 6,000 employees, and its annual revenue exceeded $2 billion in the year through Sept. 30.

Sterne Agee, which calls itself one of the oldest and largest closely held financial services firms, traces its roots to a company founded in 1901 by a mayor of Birmingham, Ala. The bank now employs more than 2,000 people in capital markets, wealth management and mortgage origination, according to its website.

Sterne Agee promoted Eric Needleman, a New York bond trader, to chairman last year.

With reporting by On Wall Street Associate Editor Andrew Welsch, and assistance from Bloomberg's Matthew Monks in New York and Edvard Pettersson in Federal court in Los Angeles.

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