Dean Witter Reynolds

Dean Witter Reynolds was an American full-service securities brokerage and diversified financial-services organization formed in 1978 through the merger of Dean Witter & Co. and Reynolds Securities. The transaction, in which Dean Witter acquired Reynolds, was regarded at the time as the largest merger in Wall Street history. The combined company inherited two established brokerage traditions: Dean Witter’s San Francisco-based retail and securities business, founded in 1924, and Reynolds’s New York investment-banking and brokerage operation, founded in 1931. The firm primarily served clients in the United States and built one of the country’s largest retail account-executive networks. Before its combination with Morgan Stanley, Dean Witter Reynolds had more than 9,000 account executives, served over 3.2 million clients, and ranked among the largest members of the New York Stock Exchange. Its securities activities included retail and institutional brokerage, equity and fixed-income trading, research, market making, exchange-based specialist activity, futures execution and clearing, investment consulting, and securities underwriting. The firm handled stocks, U.S. Treasury securities, mortgage-backed securities, corporate and municipal bonds, certificates of deposit, mutual funds, limited partnerships, and other investment products. Dean Witter also maintained an investment-banking practice. It advised corporate clients on mergers and acquisitions, divestitures, leveraged buyouts, restructurings, recapitalizations, and related transactions. Unlike some large investment banks, the company generally avoided committing substantial capital to merchant-banking transactions. Its investment-banking operation was closely connected to the retail franchise, helping develop and distribute investment products designed for individual investors. Asset management became another important capability. Dean Witter InterCapital managed approximately $90 billion before the Morgan Stanley transaction, placing it among the largest American asset-management operations at that time. The company also operated an investment-consulting business that managed approximately $10.4 billion in client assets at the end of 1996. Its broad retail distribution system allowed the company to sell mutual funds and other savings and investment products to individual investors. The company’s corporate ownership changed significantly during its existence. Sears, Roebuck and Company acquired Dean Witter Reynolds in 1981 for $600 million as part of a strategy to diversify into financial services alongside its ownership of Allstate and Coldwell Banker. In 1986, under Sears ownership, Dean Witter launched Discover Card, a general-purpose payment card intended to compete with the established Visa, MasterCard, and American Express networks. Discover differentiated itself through features such as no annual fee, comparatively generous credit limits, cashback rewards, and lower merchant fees. The card rapidly developed a national customer base and became a major source of the group’s profits. When Sears spun off its financial-services businesses in 1993, the company adopted the name Dean Witter, Discover & Co. Its activities were then organized around securities and credit services. Credit services included Discover Card and the NOVUS Network, which supported several card brands and merchant and cash-acceptance locations. In 1995 and 1996, credit services accounted for a substantial share of the company’s net income, reflecting the growing importance of Discover relative to the traditional brokerage business. In 1997, Dean Witter, Discover & Co. merged with Morgan Stanley, creating Morgan Stanley Dean Witter & Discover Co. The combined company subsequently removed “Discover” from its corporate name in 1998 and dropped “Dean Witter” in 2001. The Dean Witter name therefore survives primarily as a historical predecessor brand within Morgan Stanley’s corporate lineage, while Dis…

Dean Witter Reynolds was the product of two American securities firms with separate regional identities and business traditions. Dean Witter & Co. was founded in San Francisco in 1924 by Dean G. Witter, his brother Guy Witter, and cousin Jean Witter. Dean Witter had previously partnered with Charles R. Blyth in establishing Blyth, Witter & Co. in 1914. The newer firm initially concentrated on municipal and corporate bonds, then expanded into a broader retail brokerage operation. It acquired a seat on the San Francisco Stock Exchange in 1928 and a New York Stock Exchange seat in 1929. Despite the market crash and Great Depression, the firm remained profitable through the 1930s and 1940s. Dean Witter developed several capabilities that later became associated with its retail franchise. It established a national research department in 1938 and introduced formal account-executive training in 1945, reportedly becoming the first retail securities firm to do so. The firm agreed to merge with Chicago-based Harris, Hall & Co. in the early 1950s. In 1962, it became an early adopter of electronic data processing for securities operations. After Dean Witter’s death in 1969 and Guy Witter’s retirement in 1970, William M. Witter assumed leadership. Dean Witter & Co. went public in 1972 during a period when major privately held Wall Street firms were selling shares to public investors. Reynolds & Co. was founded in New York in 1931 by Richard S. Reynolds Jr., Charles H. Babcock, and Thomas F. Staley. Reynolds came from the family associated with Reynolds Metals and R. J. Reynolds Tobacco. The firm acquired F. A. Willard & Co. in 1934, increasing its scale and strengthening its underwriting activities. Leadership passed to Robert M. Gardiner in 1958. Under Gardiner, Reynolds expanded substantially, acquiring offices from A. M. Kidder & Co., opening new locations, and extending its geographic reach. The firm became Reynolds Securities in 1971 before its initial public offering. It introduced REYCOM, a high-speed communications system, in 1976, opened offices in Switzerland, and acquired research-oriented Baker Weeks & Co. in 1977. By the 1978 merger, Reynolds had more than 3,100 employees in 72 offices. The 1978 combination created Dean Witter Reynolds Organization, later commonly referred to as Dean Witter Reynolds. The merged company became one of the largest American brokerages and expanded to offices in all 50 states and Washington, D.C. Its business combined retail brokerage, institutional and individual securities services, research, underwriting, investment banking, investment consulting, and asset management. The firm emphasized distribution to individual investors and maintained a large account-executive network. Sears acquired Dean Witter Reynolds in 1981 for $600 million. Sears hoped to use the brokerage as a foundation for a broader financial-services network connected to its retail operations, alongside businesses such as Allstate and Coldwell Banker. Philip J. Purcell, a Sears strategist and former McKinsey consultant, was placed in charge of the brokerage. During this period Dean Witter continued expanding its securities activities while Sears invested in consumer financial products. The most consequential product development under Sears was Discover Card, launched in 1986. It sought to challenge the established card networks with a no-annual-fee structure, relatively high credit limits, cashback rewards, and lower merchant charges. Discover achieved stronger national adoption than several earlier attempts to establish a competing general-purpose card system. The company also operated the NOVUS Network, which supported Discover and other affiliated card brands. Sears separated its financial-services businesses in the early 1990s, and in 1993 the company became Dean Witter, Discover & Co. Its two principal business areas were securities and credit services. The credit-services division grew rapidly, and Discover became a major contributor to company earnings. At the end of 1996, Dean Witter’s securities business included more than 9,000 account executives and served more than 3.2 million primarily American clients. Dean Witter InterCapital managed approximately $90 billion, while the investment-consulting business managed approximately $10.4 billion. In 1997, Dean Witter, Discover & Co. merged with Morgan Stanley. The combined company was initially named Morgan Stanley Dean Witter & Discover Co. The Discover reference was removed in 1998, and the Dean Witter name was removed in 2001. Consequently, Dean Witter Reynolds is best understood as a historical securities and financial-services brand whose brokerage, asset-management, investment-banking, and credit-card operations were reorganized through the Sears separation and Morgan Stanley merger.

1. 2001Dean Witter name removed

   Morgan Stanley subsequently discontinued the Dean Witter name in its corporate branding.

   Source
2. 1997Merged with Morgan Stanley

   Dean Witter, Discover & Co. combined with Morgan Stanley to form Morgan Stanley Dean Witter & Discover Co.

   Source
3. 1993Renamed Dean Witter, Discover & Co.

   The name changed after Sears spun off the financial-services company.

   Source
4. 1986Discover Card launched

   The company introduced Discover Card as a national general-purpose credit-card brand.

   Source
5. 1981Acquired by Sears

   Sears acquired Dean Witter Reynolds for $600 million and made it a central part of its financial-services diversification plan.

   Source
6. 1978Dean Witter Reynolds formed

   Dean Witter & Co. acquired Reynolds Securities and formed Dean Witter Reynolds Organization.

   Source
7. 1931Reynolds & Co. founded

   Richard S. Reynolds Jr., Charles H. Babcock, and Thomas F. Staley founded the New York securities firm that later became Reynolds Securities.

   Source
8. 1924Dean Witter & Co. founded

   Dean G. Witter and members of the Witter family established the San Francisco brokerage that became one of Dean Witter Reynolds’s predecessor firms.

   Source

A nationwide, retail-oriented full-service securities firm that combined brokerage, investment banking, asset management, investment products, and consumer credit under a diversified financial-services model.

• Retail securities brokerageSecurities brokerage1978

  Dean Witter Reynolds operated a large full-service brokerage network serving individual investors and, to a lesser extent, institutional clients. Account executives supported order execution, investment advice, securities distribution, research, and portfolio-related services across equities, bonds, mutual funds, and other investment products.

• Dean Witter InterCapitalAsset management

  The company’s asset-management arm managed mutual-fund and other investment assets. Before the Morgan Stanley merger, InterCapital reportedly managed approximately $90 billion and ranked among the larger U.S. investment-management operations.

• Discover CardConsumer credit1986

  Introduced in 1986, Discover Card was a general-purpose credit card designed to compete with established card networks. Its early proposition combined no annual fee, comparatively high credit limits, cashback rewards, and lower merchant fees. The product became a major contributor to the group’s credit-services earnings.

• NOVUS NetworkPayment network

  The NOVUS Network linked merchant and cash-acceptance locations for cards carrying the NOVUS logo. In the mid-1990s it was described as one of the largest domestic card networks outside the dominant established systems and included Discover and other affiliated card brands.

• We measure success one investor at a time

  United States

  Dean Witter used this corporate slogan to emphasize individualized service and its retail-investor orientation.

  Outcome. Morgan Stanley later adopted the slogan after the merger.

  Source

• 1997Merge with Morgan StanleyM&A

  Dean Witter, Discover & Co. and Morgan Stanley combined their securities, investment-banking, asset-management, and related financial capabilities.

  What changed. The companies merged to form Morgan Stanley Dean Witter & Discover Co.

  Aftermath. The Discover and Dean Witter names were later removed from the corporate name, ending Dean Witter as an independent brand.

  Source
• 1993Adopt Dean Witter, Discover & Co. nameStrategy

  Sears separated its financial-services businesses from the parent company.

  What changed. The company changed its corporate name to Dean Witter, Discover & Co.

  Aftermath. The business operated as a publicly separated group organized around securities and credit services until its Morgan Stanley merger.

  Source
• 1986Launch Discover CardProduct launch

  Sears sought to develop a proprietary consumer-finance product outside the Visa and MasterCard networks.

  What changed. Dean Witter launched Discover Card with a no-annual-fee proposition, rewards, comparatively high credit limits, and lower merchant fees.

  Aftermath. Discover built a large national customer base and became a major contributor to credit-services revenue and income.

  Source
• 1981Sears acquisitionM&A

  Sears was pursuing diversification beyond its core retail business and sought a major securities platform for a wider financial-services strategy.

  What changed. Sears purchased Dean Witter Reynolds for $600 million.

  Aftermath. The brokerage became part of Sears’s financial-services portfolio and was used to support expansion into consumer financial products.

  Acquisition value. $600 million transaction value (1981)

  Source
• 1978Combine Dean Witter and Reynolds SecuritiesM&A

  Both firms were substantial American securities businesses with complementary regional and operating strengths.

  What changed. Dean Witter acquired Reynolds Securities and established Dean Witter Reynolds Organization.

  Aftermath. The combined firm became one of the largest U.S. brokerages and later expanded nationwide.

  Source

• 1997Dean Witter, Discover & Co. merges with Morgan Stanley

  The merger created Morgan Stanley Dean Witter & Discover Co., ending Dean Witter’s existence as an independent company.

  M&A
  Source
• 1993Sears spins off Dean Witter, Discover & Co.

  Following Sears’s separation of the business, the company adopted the Dean Witter, Discover & Co. name.

  Other
  Source
• 1986Dean Witter launches Discover Card

  The Sears-owned financial-services group introduced Discover Card as a new general-purpose credit-card network.

  Product launch
  Source
• 1981Sears acquires Dean Witter Reynolds

  Sears bought Dean Witter Reynolds for $600 million as part of a broader financial-services diversification strategy.

  M&A
  Source
• 1978Dean Witter and Reynolds Securities merge

  Dean Witter & Co. acquired Reynolds Securities, creating Dean Witter Reynolds in what was described as the largest securities-industry merger of its time.

  M&A
  Source

1. Dean Witter Reynolds