Downtown L.A. stock brokerage Crowell Weedon & Co. was founded during the Great Depression – and its age was showing.
While other brokerages branched out into investment banking, bond underwriting and other services, Crowell Weedon remained an old-fashioned firm focused exclusively on retail investors, making it difficult for the firm to compete in an increasingly fierce market.
Last week, partners at the firm voted to merge into Davidson Cos. of Great Falls, Mont., a brokerage that offers a broader range of services. The deal is expected to close by the middle of the year.
Bryant Riley, chairman of West L.A. brokerage and investment bank B. Riley & Co., said competition has pushed commissions down and forced firms to cut costs, find other revenue sources or merge. Just last year, B. Riley acquired San Diego brokerage Caris & Co.
“There’s power in being bigger,” Riley said. “You can eliminate overhead and get closer to the revenue. I think that’s happened to a lot of firms out there. There’s been a need to consolidate.”
Davidson has more than 1,100 employees and $34.5 billion in assets under management, compared with Crowell Weedon’s 340 employees and $9 billion in assets managed.
Davidson offers investment banking and bond underwriting services. Edward Wedbush, founder of longtime Crowell Weedon competitor Wedbush Inc., said the merger makes sense.
“Crowell Weedon’s only area was in private client services,” said Wedbush, whose firm provides brokerage services as well as investment banking, commercial banking and stock clearing. “You’ve got to be in all of these other areas. If you’re not ready to do those things, the competitive environment is going to drive you into mergers.”
Andrew Crowell, Crowell Weedon’s managing partner and grandson of firm co-founder Warren Crowell, said his company has never had the capability to get into other lines of business, such as underwriting municipal bonds. That will change with the Davidson merger.
“That’s just one example of the kind of new capabilities Crowell Weedon advisers will have access to,” he said.
Crowell Weedon partners voted April 30 to be acquired by Davidson. Shareholders will exchange some of their equity for Davidson shares. Further financial details of the transaction were not disclosed.
After the deal closes, Crowell Weedon will be a Davidson subsidiary, but it will keep its name; L.A. headquarters, at One Wilshire; and leadership. Crowell will stay on as president, reporting to Jim Kerr, president of Davidson.
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