Summary

Other Scenarios:

Buyer: E TRADE Financial Corporation (ETFC) Last Price: 1.65 Market Cap.: 3.16B
Target: TD Ameritrade Holding Corp. (AMTD) Last Price: 18.85 Market Cap.: 11.11B

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
Finance 1,180
Banking   600
Domestic Banks   564
Commercial Banks   396
Investment 129
Asset Management and Financial Advisory 78
Institutional/High-Net Advisory   9
Instruments   51
Retail Advisory   1
Securities Sales and Trading 32
Brokerage Services 21
Trading   3
Specialty Finance   63
Consumer Finance   24
Automobile Financing   8
Personal   0
Mortgage Banking   14
Financial Services   13
Technology   879
Software   248
Enterprise Management   63
Enterprise Resource Planning (ERP)   24

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Sample Products in Similar Lines of Business

Sample Products in Complementary Lines of Business
Buyer (Total: 10)
  • E*TRADE Capital Markets, LLC
  • E*TRADE Securities LLC
Target (Total: 7)
  • Ameritrade Corporate Services
  • Ameritrade Plus
  • Ameritrade
  • TD Ameritrade Holding Corporation
Buyer
  • E*TRADE Bank
  • Kobren Insight Management
  • Howard Capital Management
  • E*TRADE Capital Markets - Execution Services
Target
  • Ameritrade Advisor Services

Business Relationship Summary:

Top Key Suppliers

Top Key Customers
Buyer (Total: 6)
  • Cognizant Technology Solutions Corp. (CTSH)
  • Mack-Cali Realty Corp. (CLI)
  • TiVo Inc. (TIVO)
  • Evercore Partners Inc. (EVR)
Target (Total: 3)
  • Helios & Matheson North America Inc (HMNA)
  • Mack-Cali Realty Corp. (CLI)
  • SWK Holdings Corp (SWKH)
Buyer (Total: 0)

n/a
Target (Total: 0)

n/a

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 3,084 5,196
Revenue Per Employee 838,980.4 483,204.6
Total Revenue 644.2 626.4
Total Expenses 731.6 406.1
Other Revenue 11.1 31.1
Cost of Revenue 311.2 229.9
SG&A Expense 26.4 98.9
Research & Development 0.0 0.0
Other Operating Expense 330.7 18.0
Operating Income -87.4 220.4
Unusual Income 35.2 8.4
LT Debt to Capital 58.13 25.71
Fwd P/E -83.50 16.34
Fwd P/Rev 2.21 4.14
Book Value 3,749.6 3,704.6
Curr Portion of LTD/Cap Lease 0.0 0.0

Individual Company Summary

Focused

Buyer

Focused (): Finance > Investment > Securities Sales and Trading > Brokerage Services > Retail Brokerage Services

Target

Focused (): Finance > Investment > Securities Sales and Trading > Brokerage Services > Retail Brokerage Services

Business Description

Buyer

E*TRADE Financial Corporation (E*TRADE) is a financial services company, which provides online brokerage and related products and services to the individual retail investors, under the brand E*TRADE Financial. It also provides investor-focused banking products, sweep deposits and savings products, to retail investors. The Company?s subsidiaries include E*TRADE Bank, which is a federally chartered savings bank that provides investor-focused banking products to retail customers nationwide and deposit accounts insured by the Federal Deposit Insurance Corporation (FDIC); E*TRADE Capital Markets, LLC, which is a registered broker-dealer and market-maker; E*TRADE Clearing LLC, which is the clearing firm for the brokerage subsidiaries and is a wholly owned operating subsidiary of E*TRADE Bank; E*TRADE Securities LLC, which is a registered broker dealer. The Company operates in two business segments: Trading and Investing, and Balance Sheet Management.

Target

TD Ameritrade Holding Corporation (TD AMERITRADE) is a provider of securities brokerage services, and technology-based financial services to retail investors and business partners.The Company provides securities brokerage services, including trade execution, clearing services and margin lending. The Company provides trustee, custodial and other trust-related services to retirement plans and other custodial accounts. The Company provides a suite of investor education products and services. The Company also provides cash sweep products through third-party banking relationships. The Company provides its services through the Internet, a national branch network and relationships with registered investment advisors (RIAs). The Company?s subsidiary TD AMERITRADE Clearing, Inc. (TDA Clearing) provides clearing and execution services. On June 11, 2009, the Company completed the acquisition of thinkorswim Group Inc.

Deal Summary

Key Ratios

  Buyer Target
Gross Margin % 49.81 65.24
Operating Margin % -53.62 40.36
Quick Ratio 0.69 1.07
Current Ratio 0.69 1.07
Coverage Ratio 0.19 0.03
Total Assets 47,366.5 18,447.2
Return on Equity % -34.61 16.08
Return on Assets % -2.74 3.23
Cash+ ST Inv. Per Share 2.69 10.87
Total Debt 11,647.5 1,281.8
Total Debt to Equity % 310.64 34.6
Total Debt to Tangible Equity % 808.39 3,499.59
Debt to Asset % 24.59 6.95

Product Summary

Sector Buyer Target
Finance
Banking  
Domestic Banks
The Domestic banking sector includes banks operating in the United States.
  
Investment
Asset Management and Financial Advisory
The Asset Management and Financial Advisory branch profiles services and companies involved in directly managing personal and institutional portfolios and investment instruments, as well as advisory services like retirement and financial planning, asset allocation, and risk assessment. Banks are generally not attached to the Asset Management and Financial Advisory branch unless their asset management or financial advisory subsidiaries clearly operate with a significant level of independence from the company's core banking operations. Asset Management targeted specifically at Retail customers are considered part of Retail Brokerage and Financial Management in the Securities Sales and Trading section.
Securities Sales and Trading
The Securities Sales and Trading subsector consists primarily of services provided by investment firms acting as agents between a buyer and seller of securities, usually charging a commission, and are registered with the exchange where the securities are traded. Securities exchanges and ECNs are also included.
Specialty Finance  
Consumer Finance
Consumer loans are made for the purpose of financing automobiles, educational expenses, credit card purchases, and other consumer goods.
  
Mortgage Banking
Mortgage banking encompasses mortgage financing, as well as home equity loans, commercial construction, and other real estate financing options.
  
Technology  
Software  
Enterprise Management
Software designed to maximize the efficiency and productivity with which the enterprise is run. Includes Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) software.
  

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Product Details

Sector Buyer Target
Finance
Banking  
Domestic Banks  
Commercial Banks  
Internet Banks
Commercial banks that conduct their operations online. This does not include the internet operations of brick and mortar commercial banks.

Buyer Products:

  • E*TRADE Bank
  
Investment
Asset Management and Financial Advisory
Institutional/High-Net Advisory
Services and companies involved in directly managing institutional and high net worth portfolios and investment instruments, as well as asset allocation, and risk assessment services. Banks are generally not attached to the Asset Management and Financial Advisory branch unless their wealth management and financial advisory subsidiaries clearly operate with a significant level of independence from the company's core banking operations. Excludes: Business Development Companies; Funds; and Global Custody/Securities Processing.

Buyer Products:

  • Kobren Insight Management
  • Howard Capital Management
  
Instruments  
Funds  
Equity Funds
Companies placed at this level develop, manage, market and support equity mutual funds. Mutual Funds are funds invested in domestic and international equities. Blended funds consisting of both equity and debt components are also included. Mutual funds generally have clearly stated investment objectives, including benchmark indexing, a growth or value bias, or an industry focus.

Buyer Products:

  • Kobren Insight Management
  
Retail Advisory
Retail Advisory services includes a range of wealth management, retirement planning, trust, and financial advisory services targeted primarily at individuals and families. Companies and service offerings placed at this level may include some high net worth clients, but the services are generally accessible to investors with more moderate levels of wealth and income.

Target Products:

  • Ameritrade Advisor Services
  
Securities Sales and Trading
Brokerage Services
Institutional Brokerage Services
High volume brokerage and related support services targeted primarily at investment professionals and institutions.

Buyer Products:

  • E*TRADE Capital Markets, LLC
  • E*TRADE Securities LLC

Target Products:

  • Ameritrade Corporate Services
Retail Brokerage Services
Brokerage services targeted primarily at retail and active traders. Online brokerages are included. Also includes brokerage and other support services offered to registered investment advisors (RIAs).

Buyer Products:

  • E*TRADE Securities LLC

Target Products:

  • Ameritrade Plus
  • Ameritrade
  • TD Ameritrade Holding Corporation
  • Ameritrade Izone
  • Amerivest
Trading  
Specialists
Specialists are members of the exchange to which they apply in order to be assigned stocks to handle. Their functions are to serve as brokers to match buy and sell orders and to handle special limit orders placed with member brokers. Specialists also act as dealers to maintain a fair and orderly market by providing liquidity when the normal flow of orders is not adequate.

Buyer Products:

  • E*TRADE Capital Markets - Execution Services
  
Specialty Finance  
Consumer Finance  
Automobile Financing
A loan offered to consumers in order to finance the purchase of new and used automobiles and recreational vehicles. The loan is secured by a lien on the automobile.

Buyer Products:

  • E*TRADE Consumer Finance Corporation
  
Personal
A loan offered to consumers for general purposes, including debt consolidation, education, and other personal uses. Loan repayment is on an installment basis. The personal loans are typically made on an unsecured basis.

Buyer Products:

  • E*TRADE Consumer Finance Corporation
  
Mortgage Banking  
Financial Services  
Residential Mortgage Banking and Services  
Home Equity
A loan or a line of credit that allows a homeowner to use the equity in the property. When a loan is made, the lender places a lien against the house. In the case of default, the First Mortgage has a priority of claim over the lien that secures a Home Equity Loan.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Mortgage Origination
Residential Mortgage Origination is the process of underwriting, closing and funding mortgage loans in-house. The originator obtains a pricing premium compared to wholesale mortgage pricing, because they have the financial backing to accept the risk associated with non-performing loans. Non-REIT companies engaged in investing in residential mortgage securities are also included.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Real Estate Loans
Real estate loans consist of loans secured by residential real property and loans for the construction of residential property.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Technology  
Software  
Enterprise Management  
Enterprise Resource Planning (ERP)  
Human Resources  
Benefit/Payroll Management
Software that aids in the management of the workforce, performing functions such as benefit and payroll management.

Buyer Products:

  • Equity Edge
  • Advantage@Work
  

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Relationship Details

Key Competitors

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Overlap
  optionsXpress Holdings, Inc. n/a 991.549 16.32 14.91 4.25 3.73 4.45
TradeStation Group, Inc. n/a 292.382 18.52 20.88 2.17 2.09 1.71
Track Data Corporation n/a 7.152 10.53 n/a 0.23 n/a 0.31
Buyer
  TD Ameritrade Holding Corp. n/a 11,112.640 18.66 16.34 4.57 4.14 303.39
optionsXpress Holdings, Inc. n/a 991.549 16.32 14.91 4.25 3.73 4.45
Interactive Brokers Group, Inc. n/a 686.261 18.96 16.69 0.59 0.54 1.19
TradeStation Group, Inc. n/a 292.382 18.52 20.88 2.17 2.09 1.71
The Bancorp, Inc. n/a 213.116 621.37 34.87 2.79 2.35 1.25
Porter Bancorp, Inc. n/a 100.436 10.99 9.18 1.06 1.50 0.69
Track Data Corporation n/a 7.152 10.53 n/a 0.23 n/a 0.31
Target
  Bank of America Corporation n/a 169,039.368 n/a 20.38 2.17 1.49 1.35
Citigroup Inc. n/a 113,053.253 n/a 83.60 1.48 1.46 1.01
Morgan Stanley n/a 41,816.782 n/a 9.65 1.38 1.15 1.21
The Charles Schwab Corporation n/a 21,972.541 27.92 26.53 5.24 5.19 4.83
E TRADE Financial Corporation n/a 3,164.682 n/a -83.50 1.10 2.21 2.20
optionsXpress Holdings, Inc. n/a 991.549 16.32 14.91 4.25 3.73 4.45
TradeStation Group, Inc. n/a 292.382 18.52 20.88 2.17 2.09 1.71
Track Data Corporation n/a 7.152 10.53 n/a 0.23 n/a 0.31
Fidelity Investments (FMR Corp.) n/a n/a n/a n/a n/a n/a n/a
Scottrade n/a n/a n/a n/a n/a n/a n/a

- Defined by the Company - Defined by Others

Dependent Suppliers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Overlap
  Mack-Cali Realty Corp. n/a 2,732.085 51.97 12.01 3.57 3.86 1.49
Buyer
  Cognizant Technology Solutions Corp. n/a 15,116.109 28.26 24.76 4.61 3.81 6.34
Mack-Cali Realty Corp. n/a 2,732.085 51.97 12.01 3.57 3.86 1.49
TiVo Inc. n/a 1,831.518 n/a -43.39 7.71 8.33 9.84
Evercore Partners Inc. n/a 546.105 n/a 22.24 1.62 1.38 2.61
Unica Corporation n/a 192.928 n/a 64.21 1.94 1.73 6.40
Salary.com, Inc. n/a 44.564 n/a -3.19 0.97 0.97 n/a
Target
  Helios & Matheson North America Inc 12.00% 2.588 n/a n/a 0.16 n/a 1.33
Mack-Cali Realty Corp. n/a 2,732.085 51.97 12.01 3.57 3.86 1.49
SWK Holdings Corp n/a 35.033 n/a n/a 0.71 n/a n/a

- Defined by the Company - Defined by Others

Key Customers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value

- Defined by the Company - Defined by Others

Key Partners

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  Federal Home Loan Bank n/a n/a n/a n/a n/a n/a n/a
Target
  Fiserv, Inc. n/a 7,679.995 16.13 12.53 1.88 1.82 n/a
Advent Software, Inc. n/a 1,148.130 31.13 48.71 4.42 4.07 13.63

- Defined by the Company - Defined by Others

Financials

  Buyer Target Combined Entity
Income Statement
Operating Items
Revenue 2,830.2 2,351.0 5,181.2
Other Revenue 47.8 80.1 128.0
Total Revenue 2,878.1 2,431.1 5,309.2
Cost of Revenue 1,444.6 845.0 2,289.6
SG&A Expense 114.4 349.6 464.0
Depreciation & Amortization 113.1 131.9 245.0
Interest Expense 0.0 36.1 36.1
Other Operating Expense 1,620.7 65.2 1,685.8
Unusual Expense (Income) 1,128.6 22.2 1,150.8
Total Expenses 4,421.3 1,449.9 5,871.2
Operating Income -1,543.3 981.2 -562.0
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng -292.2 -2.0 -294.2
Other, Net 0.0 0.0 0.0
Income Before Taxes -1,835.4 979.2 -856.2
Income Taxes -537.7 383.7 -154.0
Income After Taxes -1,297.8 595.5 -702.2
Net Income - Excl. Xord. Items -1,297.8 595.5 -702.2
Net Income - Incl. Xord. Items -1,297.8 595.5 -702.2
Income Avail. to Common -1,297.8 595.5 -702.2
Share Items
Basic Avg. Shares Outstanding 1,867.2 587.8 2,455.0
Basic EPS - Excl. Xord. Items n/a 1.01 -0.29
Basic EPS - Incl. Xord. Items n/a 1.01 -0.29
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 1,867.2 595.6 2,462.8
F.D. EPS - Excl. Xord. Items n/a 1.00 -0.29
F.D. EPS - Incl. Xord. Items n/a 1.00 -0.29
Balance Sheet
Assets
Cash and Equivalents 5,028.5 6,474.7 11,503.3
Accounts Receivable 3,827.2 7,637.8 11,465.0
Inventory 0.0 0.0 0.0
Other Current Assets 0.0 0.0 0.0
Current Assets 8,855.7 14,112.5 22,968.2
Accum D&A 0.0 0.0 0.0
PPE, Net 320.2 244.8 565.0
Goodwill & Intangibles 2,308.7 3,668.0 5,976.7
Long Term Investments 13,541.9 315.8 13,857.7
Other Assets 3,165.0 90.3 3,255.4
Other LT Assets 0.0 15.7 15.7
Total Assets 47,366.5 18,447.2 65,813.7
Liabilities
Accounts Payable 5,234.2 12,554.1 17,788.3
Payable/Accrued 1,137.5 599.2 1,736.6
ST Debt 6,441.9 0.0 6,441.9
Other (Current) Liabilities 0.0 80.2 80.2
Current Liab. 12,813.6 13,233.5 26,047.0
LT Debt 5,205.6 1,257.0 6,462.6
Capitalized Lease Obligations 0.0 24.8 24.8
Total LT Debt 5,205.6 1,281.8 6,487.5
Deferred Taxes 0.0 227.2 227.2
Other LT Liab. 25,597.7 0.0 25,597.7
Total Liabilities 43,616.9 14,742.5 58,359.5
Shareholders Equity
Common Stock 18.9 6.3 25.3
Additional Paid in Capital 6,258.1 1,558.7 7,816.8
Retained Earnings -2,123.4 2,666.4 543.0
Treasure Stock 0.0 -526.9 -526.9
Other Equity -404.1 0.1 -404.0
Total Equity 3,749.6 3,704.6 7,454.2
Total Liab. & Equity 47,366.5 18,447.2 65,813.7
Shares Outstanding 1,894.0 589.0 2,482.9
Cash Flow
Operating Cash Flow
CF Net Income -1,297.8 595.5 -702.2
CF Depreciation 346.0 48.0 394.0
CF Amortization 0.0 83.9 83.9
CF Deferred Taxes -488.7 92.9 -395.7
Other Non-Cash Items 2,109.4 44.1 2,153.5
Change in Working Capital 303.0 -267.6 35.5
Total Cash From Operating Activities 972.0 596.9 1,568.9
Investing Cash Flow (not calculated)
Capital Expenditures -86.2 -94.3 -180.5
Other Investing Cash Flows 1,284.4 -90.6 1,193.8
Total Cash From Investing Activities 1,198.2 -184.9 1,013.3
Financing Cash Flow (not calculated)
Dividends Paid 0.0 0.0 0.0
Purchase Or Sale of Stock 733.1 -397.8 335.3
Purchase and Retirement of Debt -7.1 -8.4 -15.5
Other Financing Cash Flow -3,288.5 3.8 -3,284.7
Total Cash From Financing Activities -2,562.4 -662.6 -3,225.0
Exchange Rate Effects 21.6 0.3 21.9
Net Change in Cash -370.6 -250.3 -620.9
Cash Taxes Paid 19.3 350.9 370.3
Cash Interest Paid 665.0 37.5 702.6