When a clown moves into a palace, he doesn't become a king; the palace becomes a circus.
Things have gone downhill ever since he started at Edward Jones.
14 replies (most recent on top)
This post cracks me up! US Bank has a market cap of $87.25 billion as of today and long term debt of $62.5 billion. So, you’re telling me, they’ll be willing to pay 4x five years of future earnings (net income cash flow) which is give or take is $2bill a year for 5 years, $10b. Multipled by 4, to buy EJ for $40 billion? Advisors attrition is the largest risk to a buy out, 4x is appropriate. So US Bank would either have to borrow $40 billion and have total debt of $100 billion or issue $40 billion in stock, diluting their current shares by 40+%. No way their current share holders would eat them alive! They’d expect a 25% return on their investment, give or take $10billion a year. Our Revenue is $16b and $14b of that is expenses, largely advisor comp. So, how would US Bank ring out $10b+/- of cost savings out of us and still produce the same level of increasing revenue to have positive ROI to justify taking on the debt/diluting their share price?
Citi’s mark cap is $200b+ and debt of $315b. They aren’t taking on $40b of debt for $10b ROI. Again, EJ wouldn’t produce that level of ROI for them. The stock would tank for adding 10+% more in debt.
The math for competitors won’t work. One of the few reasons we’d go IPO is to raise significant cash for a very large acquisition or sustained external shock. A very large acquisition isn’t likely. I’m not a fortune teller, so who knows about a sustained external shock. But doing an IPO during a sustained external shock wouldn’t produce the economics needed…Stop wasting time on the merger and IPO theories.
@em I believe this is spot on. Chubak is definitely a cringe little creep, but Penny is at the top and has already admitted she let things get out of control. If anyone else had failed even one percent as much we would have been fired on the spot. Penny even got a man ki-led over all of this. She is a disaster and a disgrace. I think EJ will be like Merrill as Bank of America's arm. EJ will exist in name only. Shame on you Penny. We will not forget.
These consultants and consulting firm alumni have zero clue how to grow a business. All they know how to do is cut expense to grow the bottom line. They are incapable of long term thinking. They only think one quarter (or trimester) at a time. Whether DC becomes managing partner or not, his and Hasan's line of thinking is the future of EJ.
My guess has always been US Banks
What bank is it?
@fd , that's what I'm thinking.
So, the field is currently been given incentives to get clients to to get a bank account with EJ.
Opinion: is this woven into the larger plan to merge with a bank?
@em OP here. You nailed it. This is absolutely the story behind it all.
He is being groomed to take over after the current train wreck leaves. This is why things are rapidly changing. He has no intention of ever living in STL or Tempe. So, there will be a push for expanding the NYC hub while also getting our bottom line cut/chopped for some kind of merger with a NYC based bank. We will all be told that we are still a private LP, but it will be on paper only. Once we merge, our fate is sealed and we will be EDJ in name only as merging partner looks to gut and eliminate most of EDJ as we know it now. There is no other logical explaination as to why we are moving as fast as we are in the wrong direction. This idea of "muh 100 years" and 2030 vision hoopla is just more BS talking points. Look at how they will change LP payouts, look at how they changed the rules to make it GP 50% min vote FOR a merger or to go public. If there was never any intention of this, why did P.P change the freakin rules this year? Connect the dots and step back far enough to see the big picture of what is going on.
@OP wake up people. He isn’t running the place. Yea he is on ELT, yea he has power but there is one person in charge and she is creating all these messes. She is hiring consultants left and right. She has created an advisory board all from the outside with little knowledge of our industry. she is busy rubbing elbows with other CEOs and going to conferences. She has self admittedly let things get out of hand and created a bigger mess with ER.
@bq, I'm betting 2027.
McKinsey legacy. Company sold or IPO in less than 3 years
His photo opp in San Francisco was lovely.
That guy really su-ks. Definitely spits when he talks. Probably a lot.