DALLAS - First Southwest & Co. announced yesterday it will purchase the assets of rival Masterson Moreland Sauer Whisman Inc., creating a powerhouse financial advisory and securities firm with 300 employees.
The deal, expected to close Jan. 31, combines 50-year-old First Southwest, the state's top financial advisory firm, with Texas' second largest financial adviser, according to Securities Data Co. Combined, the firms handled $3.3 billion of advisory work in the first nine months of last year.
Hillel Feinberg, president and chief executive officer at Dallas-based First Southwest, declined to disclose a purchase price or put a value on the deal between the two privately held firms. Feinberg said he will continue to head the public finance operations at the new firm.
Already the top financial advisory firm in the state, First Southwest could seal its dominance in Texas by winning access to accounts in the Houston area and throughout the state's Gulf Coast.
"Especially when Wall Street firms such as Chemical are getting out, the purchase shows our clients that First Southwest is very committed to the public finance business," Feinberg said.
Al Bacarisse, executive director of the Texas Bond Review Board, says the move echoes the national trend in financial services. "Some firms are electing to drop out. Those who are left are probably going to have to consolidate and get stronger to stay healthy."
Both Feinberg and Tom Masterson, chairman of Houston-based Masterson, said they expect the integration of the two firms to be "seamless."
While the two firms' duplicate branches in Austin, San Antonio, and Houston will be consolidated, no layoffs are planned, Feinberg added. First Southwest currently has about 200 employees, while Masterson Moreland employs about 100.
Henry Sauer, currently vice chairman of Masterson Moreland, will become manager of the combined firm's Houston operation. He will head First Southwest's municipal bond department in Southeast Texas. George Whisman, a Masterson vice chairman, will also join the new firm as executive director. Masterson and Marvin Moreland, the Houston firm's president, will retire Feb. 1.
Masterson said the deal hastens his planned retirement by one month and fulfills a plan to "let the younger generation take over" - a generation that includes his son, Drew Masterson, currently a Masterson senior vice president who is expected to stay with the new firm. Regardless of whether the deal had been completed, Masterson said he planned to retire in March.
Masterson Moreland, founded in 1985, steadily expanded its base of financial advisory clients in the past decade with offices in the state's largest cities.
Feinberg said that First Southwest plans to expand the new Masterson office in Fort Worth. The Houston firm opened the Fort Worth office this summer to serve the Dallas/Fort Worth Airport, which hired the Masterson and Walton Johnson & Co. to replace First Southwest earlier this month.
The clients that Masterson Moreland brings to the merger include: The cities of Houston and San Antonio, and the Texas Public Finance Authority.
According to Securities Data, First Southwest is consistently one of the top financial advisory firms in the nation. Before the purchase, First Southwest was ranked fifth nationally among financial advisers in 1995, with 211 deals worth $3.1 billion; while Masterson Moreland was ranked 15th, with 52 deals worth $1.2 billion. The Houston firm was last in the Top 10 at number nine in 1992.
In underwriting, First Southwest ranked 38th nationally among senior managers, handling $570 million worth of deals. Masterson ran books on $160 million, ranking 65th.
