Broker/dealer aggregator Wentworth Management Services has entered into an agreement to merge with Kingswood Acquisition Corp., a special purpose acquisition corporation sponsored by the major shareholders in British wealth management firm Kingswood Group and a sister company to Kingswood U.S., according to an announcement.
The move would allow Wentworth, which owns four independent broker/dealers, to go public. The deal is expected to close in the fourth quarter.
"This transaction underscores the importance for wealth management firms to align themselves with organizations that have truly global reach, resources and expertise to accelerate their continued growth and make the most of multiple opportunities that industry, market and economic trends are creating,” said Michael Nessim, CEO of KWAC, in a statement. “We're pleased to have supported this transaction and look forward to all that we can achieve together going forward."
The two will become subsidiaries of newly created Binah Capital Group, which will be publicly traded. The combined entity will have over 1,900 advisors, $25 billion in assets under management and $285 billion in affiliated AUM. Its pro forma enterprise value is expected to be $208 million.
The combined entity is expected to generate gross cash proceeds of about $30 million, “assuming no redemptions of cash in trust.” The firms also anticipate a $15 million capital raise, for transaction expenses and growth capital.
Wentworth was founded in March 2016 and stresses on its website that it is not a private equity fund. Instead, it intends to acquire b/ds in order “capture economies of scale needed to service financial advisors” and help firms grow. In December 2017, Wentworth made its first acquisition of an independent broker/dealer by purchasing Albany, N.Y.-based Purshe Kaplan Sterling Investments. Wentworth also acquired Cabot Lodge Securities at the closing of the Purshe Kaplan Sterling deal.
One year later, Wentworth made its next acquisition, purchasing World Equity Group, an IBD based in the Midwest. The firm has also acquired Independent Planners Group, an insurance brokerage general agency based out of Scottsdale, Ariz.
Kingswood launched its SPAC in November 2020, announcing it had successfully raised $115 million in its initial public offering and would use proceeds from the public markets to invest in U.S.-based RIAs and wealth management firms. Larry Roth, former CEO of Cetera Financial Group, was brought in as lead director.
The firm had a deadline of May 24, 2022, to complete its initial business combination, but shareholders voted to extend the deadline six months to Nov. 24, 2022, according to regulatory documents.
Craig Gould, president of Wentworth, is expected to serve as president of Binah Capital.
“SPACs are a quick way to go public, but their track record is subpar at best,” said Jonathan Henschen, founder of the recruiting firm Henschen & Associates in Marine on St Croix, Minn. “Many SPACS used celebrities to attract investors but a year after, the share price is most always less than their initial price.”