The old Morgan Keegan as we know it will soon be gone. Isn’t it ironic that the grand plan of management to resurrect the firm via venture capital financing was apparently sidetracked by the mess at MF Global among other things – when the reputation of MK was itself irrevocably harmed by its own financial mess with its RMK Funds.
The saddest thing for me is that the losers in this deal – the home office personnel of MK – are a great bunch of loyal employees and long-time friends. They are the people that are least able to afford losing their jobs, and since many have long-term ties to Memphis, the least able to pick-up and move to Florida. The other loser from this deal is the City of Memphis.
Sure, part of the deal included an undefined support center in Memphis. But I can guarantee you that it’s not going to be 900 or 1000 people for very long. The only way that a deal like this can make financial sense for Raymond James is going to be for them to consolidate operations, IT and some of the investment product areas among other support areas. Credit the folks at MK for getting some concessions so that Memphis does not lose all of its jobs. But in 12 or 18 months, when the deal gets closer to being done, the outcry over job losses will be far less than it would be today.
I do give MK upper management credit for being master negotiators even though they were not able to take over the firm themselves. The CEO of MK is now President of Raymond James and his old department, Fixed Income, is not surprisingly going to be headquartered in Memphis (as is Public Finance). So the top executives did okay for themselves. Anyone surprised?
For most financial advisors, the deal will work out just fine. In fact, a close friend who is an advisor at the firm said to me last week that Raymond James is one of the firms he would have considered going to. Advisors will be paid to stay; and if these offers are too low, they will leave and get paid by another firm. But most will continue on at the combined firm for now with only the interruption of new paperwork for their clients.
RIP Morgan Keegan – and good luck to the many loyal back office employees that made this firm great.
