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Avantax Wealth Management

Avantax Shareholders Approve Sale to Cetera

Avantax CEO Chris Walters is expected to depart following the deal’s closing.

Avantax shareholders overwhelmingly approved the merger between the tax-focused wealth management firm and Cetera Holdings at a special shareholder meeting Tuesday, according to SEC filings.

Avantax announced the agreement to sell to Cetera in an all-cash $1.2 billion deal September, with shareholders cashed out at $26 per share. The move would take Avantax private and delist it from Nasdaq, with the remnants of the firm operating as a separate division within Cetera.

In addition to voting to approve the merger, shareholders also agreed by a wide margin that compensation “may be paid or become payable to (Avantax’s) named executive officers that is based on, or otherwise relates to, the merger.”

Previous SEC filings indicated Avantax CEO Chris Walters, CFO and Treasurer Marc Mehlman and Chief Legal Officer and Corporate Secretary Tabitha Bailey all planned to step down after the deal closed. Other filings indicated Walters could receive a “golden parachute” of up to $21.5 million with the finalization of the deal.

Earlier this year, Avantax changed its name from Blucora and sold its tax software business, but it faced increased calls from activist investors to consider selling the company (including from Engine Capital, which owned about 2% of Avantax shares). 

Engine urged Avantax to consider a sale because of its holding company structure, competitive positioning shortfalls and that improvements in recruitment and advisor satisfaction made a sale more attractive to buyers. Bloomberg first reported on the possibility of a sale in July.

Avantax sprang from combining tax-focused broker/dealers HD Vest and 1st Global in 2019, leading to a firm with 4,200 advisors and $67 billion in client assets; by 2023, Avantax’s advisor count shrunk to 3,078 though its client asset total grew to $84 billion, more than half of which were under management.

In October, Avantax also revealed via SEC filings that it faced multiple lawsuits from shareholders claiming the Cetera deal could shortchange shareholders and that the proxy statement touting the deal omitted material information. 

The plaintiffs demanded the Cetera deal be put on hold until the disclosures were made, including information on managements' conflicts of interest, post-employment agreements and some financial projections for Avantax. 

Avantax denied that the additional disclosures were legally required, but filed an amended regulatory statement with the information, “in order to moot the unmeritorious disclosure claims, alleviate the costs, risks and uncertainties inherent in litigation and provide additional information to its stockholders.”

Neither Cetera nor Avantax returned requests for comment as of press time.

Avantax management has waged numerous fights against activist investors over the years. In 2021, Ancora, an RIA acquired by Focus Financial Partners, waged a proxy battle against Blucora, arguing management failed to find synergies between Blucora’s roll-up of tax-focused b/ds, and its legacy professional tax software, leading the stock price to dip (shareholders voted to retain the board members).

Later that year, Ancora also pressured the board of directors to sell its online tax prep unit, which it eventually did in November 2022. In February 2022, Engine Capital also pressured Blucora to attain three seats on the board.

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