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B-D Consolidations Won't Be Easy, Tibergien Says

WASHINGTON – Many companies with deep pockets can get deals done. But making an acquisition work as companies are integrated – especially multiple acquisitions in quick succession – is far tougher, says financial services veteran Mark Tibergien.

“How do you merge the technology, the culture, the approach to business, the branding? Historically, that’s been really difficult,” says Tibergien, CEO of Pershing Advisor Solutions. Yet consolidation has become a planning industry fixation lately following the rapid-fire deals this month by RCS Capital, the New York-based brokerage led by Nicholas Schorsch, who also is chairman of American Realty Capital Properties.

RCS agreed this month to pay $1.15 billion for Cetera Financial Group as it seeks to build a network of brokers across the country. The deal would give RCS 9,000 financial advisors – putting them behind only industry leader LPL Financial by that yardstick.

The Cetera acquisition is at least the fourth broker-dealer pickup for RCS in the past four months; two days later, Schorsch added J.T. Turner to the fold. In late 2013, he announced deals for Summit Financial Services and Investors Capital.

In an interview at the Financial Services Institute conference in Washington, Tibergien says that, years ago when he was a consultant, he researched other industries to gauge whether consolidation worked as a means for growth.


“Frankly, it’s rare that a consolidation strategy is successful. … One of the most critical elements is not only are you well financed, but that you act quickly. If you languish in your acquisition, then you’re like a house that has been on the market too long and people become wary. I would think that this fast-acting approach is saying, ‘Look, we’re going to do it now. It’s a blitzkrieg. We’re going to do it quickly and we want to consolidate the space as fast as we can.’ That’s one of the key elements in making it happen,” Tibergien says.

“The second element is having the right management team,” he adds. “To the extent that I can see, he’s kept the good people on board and I’m sure that there will be some reorganization around them with some critical people. The third question then is: What does he do once the acquisition is done? Is it going to be more about a liquidity event, like a public offering like LPL did, or is it going to be more about a growth strategy, about really creating a brand in the marketplace that’s formidable? Either approach could be fine. I think, though, that the people affiliated with it would probably rather see an investment in a real branding opportunity,” Tibergien says.

Calls to Schorsch’s office and RCS’ public relations firm seeking comment were not immediately returned.


Tibergien called the spate of industry consolidation “as natural as fires and floods. I think what happens in the marketplace is that, as you see the ebb and flow of an industry, that you have kind of a forest fire and then you have new growth and that’s sort of what we’re seeing at this point. I think the analogy I would use is that the market crisis of 2008 really in a sense was a forest fire that burned a lot of people out of their homes and charred the earth, and so what we’re seeing is a reincarnation.”

In considering the likelihood of whether certain deals will be successful, Tibergien asks, “Are people doing it for a financial motivation or a strategic motivation? It would appear in [the RCS] case that there’s a real strong, strategic view of this business, which I agree with. It’s a tremendous business to be in … because there’s a lot of money that has to be advised and stronger organizations will be able to capture that market.”

That likely means Schorsch’s spending spree will generate still more headlines, Tibergien predicts.

“It’s hard for me to imagine that he’s done. He’s probably talked to just about everybody, that would be my guess. … It’s a brilliant opportunity to change the landscape of the industry.”

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