Daniel Seivert, chief executive of Los Angeles investment banking firm Echelon Partners, said he doesn't see LPL's offering having a big industry impact.
"There's 3,000 broker-dealers, and there are about 40 that are public," Seivert said. While going public is an option for some who get to the right scale, he said, "for the vast majority of broker-dealers it's not really something that's relevant or that they aspire to."
Still, Seivert expects independent broker-dealers everywhere to watch LPL's valuation and recalculate their own worth based on the deal. As a public company, LPL will be offering up not only stock but a lot more information about its business. "It doesn't mean they can replicate it, but they're certainly going to have a playbook," he says.
Equity analyst Michael Gadin at Morningstar Inc., also cautions against reading too much about the industry into LPL's offering. LPL is unlike a number of other currently publicly traded firms in the space in that it's highly leveraged and that its "relatively subdued profitability" is quite different from many other firms, Gadin said.
As for consolidation, Gadin says, "Certainly, there's a lot of growth in this space. However, competition is very brutal so I'm not necessarily sure that wide-scale consolidation lies immediately ahead."
Some are looking to the offering to help further legitimize the independent model. "Traditional Wall Street and regional firms have perhaps looked at us as a hobby--they're cute and nice, but not really a credible business," said Tim Murphy, chief executive and president of Investors Capital, a publicly traded independent broker/dealer. "LPL is something that Wall Street needs to stand up and recognize as a real business."
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