Merger Perpetuity or the last dance for IBD

EF Hutton, Paine Webber, Bache & Co, Dean Witter Reynolds, Shearson, Smith Barney, Lehman Brothers, Kuhn Loeb, Bear Sterns, First Boston, Kidder Peabody, Dupont, White Weld, Solomon Brothers, Drexel, etc...

Today was supposed to be a somewhat boring day for me. Calls to return, reports to write up, billing to review all timed to a To-Do list not a clock. Well that all went to hell with the blockbuster announcement du jour, Commonwealth-LPL. Instead I was peppered with urgent conference calls, recruiters needing guidance, consulting clients wanting insight, reporters looking for an edge on what could be a pretty homogenous story and buy and sell side analysts looking for "the trade."

As I spoke to the often urgent for information I could not help but be splashed with a big bucket of deja vu. Yeah, I have been here before. Not just once but dozens of times. More times than the bifurcated list of past legends quickly spewed as the lead to this commentary. Each prior event had its differences. Some shotgun marriages, some financial fiascos, some mergers of strength and others just natural deaths from old age. What intrigues me is which contributed the most meaningful DNA to the financial services gene pool? Which made us stronger? Which made us more vulnerable? Is this the last chapter in the Independent Broker Dealer evolution forced by M&A? Lots of questions with no obvious answers. Well, maybe one. There are not many firms left to buy that you would want to buy. Large IBD firm M&A opportunity is pretty much over.

As the day progressed I read or listened to all the "experts" offer their take on what this means. Only one avoided the temptation of self interest. Most only restated the obvious. A few speculated, with no proof, of the motivation. All hinted at a possible result. All were principally commenting to insure they had a seat at the table

Here is my first day take: A rich and deeply resourced firm had the opportunity to acquire a competitor who has some proven great qualities. The math is accretive. It is a good trade for all involved. Now we look forward to the big reveal. Will the resulting offspring only resemble the dominant gene parent or will the desired recessive genes contribute fully to a perfect new being. Damned if I know. Anybody who tells you differently is making shit up.

For the balance of the week we will hear more, learn more and be better positioned to give opinion. It will take months or longer to know it all. But we will keep watching.

Meanwhile, it's just Déjà Vu all over again.