Advisor Group is buying Ladenburg Thalmann Financial Services in a $1.3 billion deal that will create an independent broker-dealer with nearly 11,500 financial advisors and more than $450 billion in client assets.
Some are calling the soon-to-be merged companies an “LPL Alternative,” referring to Boston-based LPL Financial Holdings Inc., considered the largest independent broker-dealer in the U.S. This merger would make Advisor Group the second largest by number of advisors.
Phoenix-based Advisor Group, Inc., already one of the nation’s largest networks of independent wealth management firms serving over 7,000 advisors and overseeing $271 billion in client assets, entered into a definitive merger agreement Monday night with Ladenburg Thalmann Financial Services Inc., a publicly traded diversified financial services company based in Miami.
Advisor Group absorbing its next biggest rival marks its second billion-dollar deal of the year, following its own August acquisition by private equity firm Reverence Capital Partners.
Advisor Group’s current CEO and president, Jamie Price, will remain at the helm of the expanded company, but the leadership team will include senior executives from the two merger partners, according to a news release announcing the merger. Ladenburg’s firms will not be merged with Advisor Group’s firms, reflecting both companies’ commitment to a multi-brand network model.
“This acquisition brings together the best of two industry leaders, to the benefit of the financial advisors we collectively serve. We believe that the investments necessary for competitively differentiated technology, practice management, products and service excellence require a greater level of scale than either of our companies can achieve on a stand-alone basis,” Price said. “In fact, as our two organizations learned more about each other’s platforms, it became obvious that our strengths rounded out each other’s offerings, and combined, we will have one of the most comprehensive and best-in-class platforms for financial advisors in the industry.”
Under the terms of the transaction, Ladenburg agreed to be acquired by Advisor Group through a cash merger, in which each outstanding share of Ladenburg’s common stock will be converted into a cash payment of $3.50 per share. The total enterprise value of the transaction is approximately $1.3 billion, taking into account Ladenburg’s common stock, preferred stock and outstanding debt.
The transaction, which is subject to customary closing conditions, including the approval of Ladenburg’s shareholders, and receipt of required regulatory clearances and approvals, is expected to close in the first half of 2020.
Advisor Group’s network of firms consists of FSC Securities Corporation, Royal Alliance Associates, SagePoint Financial and Woodbury Financial.
Ladenburg’s independent advisory and brokerage firms include Securities America, Triad Advisors, Investacorp, KMS Financial Services and Securities Service Network (SSN). Additional Ladenburg subsidiaries include Highland Capital Brokerage, a leading insurance solutions brokerage; Premier Trust, a financial advisor-focused trust services company; and Ladenburg Thalmann & Co., a middle market investment bank.
“We are confident this transaction will help our advisors accelerate the growth of their businesses, while enabling them to benefit from the highly personalized service experience they have always enjoyed, under a very similar multi-custodial, multi-clearing and multi-brand structure,” said Ladenburg Thalmann Chairman, President and CEO Richard Lampen. “We have always been impressed with Advisor Group’s platform, offerings and leadership. Advisor Group’s CEO, Jamie Price, and his management team offer a mature shared services model and a demonstrated ability to innovate and invest in ways that help advisors grow.”
Merger aims for future leadership in RIA segment
The news release said Advisor Group will be one of the industry’s leading providers of a multi-custodial, multi-clearing model that drives maximum choice and flexibility for financial advisors upon the merger’s completion.
Because both Advisor Group and Ladenburg use Pershing and National Financial (part of Fidelity Custody & Clearing Solutions) as their largest clearing providers, no repapering of client accounts will be necessary.
As it becomes one of the largest multi-custodial and multi-clearing networks of firms in the country, Advisor Group said in the news release it will be even better positioned to redefine the RIA segment of the wealth management space.
The combined company will be able to support all financial advisor business models, including the hybrid advisor doing both securities and advisory business, as well as the “investment advisor only” professional who is either utilizing a corporate RIA platform, or has an independent RIA.
“The appeal of bringing Ladenburg and Advisor Group together is driven in large part by our shared vision for driving a transformative and innovative approach to the wealth management space,” said Adam Malamed, Executive Vice President and Chief Operating Officer of Ladenburg. “For example, among the many advantages of our multi-custodial, multi-clearing capabilities are the expertise and leadership we can further build in the RIA space.”
The combination of Ladenburg and Advisor Group, Malamed continued, “creates a unique offering for financial advisors who are primarily fee-based, or fee-only, whether they want to have their own RIA under a turnkey level of back and middle office support, or would prefer to do fee-only work through a corporate RIA, without having to also hold securities licenses on the brokerage side of our industry.”
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
