When former LPL CEO Mark Casady and his Board sought a buyer for the nation's largest independent brokerage firm, they retained Goldman Sachs. The target was a strategic buyer or a financial buyer willing to pay between $42 and $50 a share. The search reportedly focused on big players in retail brokerage – e.g., BofA ML, Ameriprise, UBS – but no one was interested.

According to M&A and private placement bankers, the only interested parties were financial buyers from private equity firms, including KKR – but at a price no higher than $38-$39 a share. There were concerns about the firm's future profit margins, the need for continued investments in technology, and an increasingly difficult regulatory environment.

Casady was credited with leading LPL after it did a leveraged buyout in 2005, and with guiding it through the Great Recession. During the period up until LPL's IPO in 2010, it made several successful acquisitions and attracted some of the top management in the industry. Unlike many broker-dealers, Casady also adopted a pro-consumer position and embraced the DOL's proposed fiduciary rule. Given that LPL is making a serious push into the retirement plan business, supporting the rule was a logical move.

Attracting top talent was easy for a company planning to do an IPO, but within a few years after LPL went public in 2010 and managers became vested in their stock options, turnover in the executive suite accelerated dramatically. As the nation's largest independent B-D with a strong balance sheet, LPL also became a favorite target of regulators and, as FINRA and various states sought to display they were getting serious in a post-financial crisis world, LPL's fines starting piling up. These were among the factors that made the firm less attractive to potential buyers.

If the incoming Trump administration follows through on its promise to deregulate financial services, LPL could become a more attractive investment and possible acquisition candidate down the road. This potential scenario probably was not lost on LPL directors when they decided to take the firm off the market last month.

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