Ladenburg Thalmann and its five independent broker/dealers with some 4,700 advisors may soon be owned by Advisor Group, another large b/d network that was acquired earlier this year by private equity firm Reverence Capital Partners, according to reports by Bloomberg’s Matthew Monks. The two are currently in exclusive talks, although nothing has been finalized, according to Bloomberg.
One source familiar with the investment banking community told WealthManagement.com that Genstar, which owns Cetera Financial, another independent broker/dealer network, and Reverence had emerged as the top buyers.
“The management team was most excited, it sounded like, from what I’m hearing, to focus on Advisor Group because they felt they were further along in their platform development and would bring more to the advisors in terms of benefits,” the source said. “The firms that are likely to be most willing to pay full price are those two firms [Genstar and Reverence] because they’re already in the business and theoretically, they’d be in a better position to use some of the scale that they already have.”
Investment bankers familiar with the bidding process said scale was only part of the reason Advisor Group was eyeing Ladenburg.
“There’s also potentially a strong cultural fit between the two organizations, just given that they both support a multi-brand, multi-firm strategy,” one source said. “They also both support Fidelity and Pershing as key clearing and custodial platforms for their respective advisors.”
On Wednesday, Bloomberg reported and WealthManagement.com independently verified that Ladenburg was considering a sale and had hired Jefferies to advise on the process of exploring its options. Sources said it would most likely be an acquisition by a private equity firm that either already owns a firm within the space or is interested in entering the space in a major way. And if it were sold to a private equity firm, it would most certainly be in the form of a change of ownership and taken private; it would not likely be sold in pieces, sources in the investment banking community said.
Earlier this year, Advisor Group’s previous private equity owner, Lightyear Capital, was reportedly in talks with Cetera's parent to merge the two firms, but those negotiations broke down.
Representatives for Ladenburg and Advisor Group could not be reached for comment. Reverence spokesman Michael Flaherty declined to comment.
In an email sent out to Ladenburg’s financial advisors earlier this week, obtained by WealthManagement.com, Chairman, President and CEO Dick Lampen said the company could not comment on market rumors or speculation. But Lampen assured advisors of its continued commitment to them and their clients, and he said its open architecture platform and multiple clearing/custody approach would remain intact.
The fact that multiple clearing and custody partners has been a central part of Ladenburg’s value proposition to its financial advisors means the likelihood of a player like LPL Financial or Ameriprise emerging as a buyer is essentially zero, sources within the investment banking community added.