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Cetera Closes on Avantax Acquisition

The deal takes Avantax private, and the tax-focused firm will operate as a separate division within Cetera.

Cetera Holdings has closed on its acquisition of Avantax for $1.2 billion, with shareholders cashing out at $26 a share, according to an announcement. The deal takes Avantax private, and the tax-focused firm will operate as a separate division within Cetera. Avantax stock will be de-listed from the Nasdaq.

Avantax announced the agreement to sell to Cetera in September. The deal adds more than 3,100 financial advisors and over $82 billion in assets to the broker/dealer network. Shareholders voted to approve the merger last week.

“Partnering with Avantax is core to our growth strategy and capitalizes on Avantax’s many capabilities that benefit financial professionals, affiliates and their clients,” said Mike Durbin, CEO of Cetera Holdings, in a statement. “The Avantax community immediately builds upon Cetera’s tax and wealth management capabilities and expertise, complementing our established tax-centric Cetera Financial Specialist team, and provides financial professionals another avenue for affiliation with Cetera. In addition, this acquisition establishes a strategic relationship between Cetera and Fidelity, as Cetera expands further into a multi-custodial platform, enhancing our capabilities to deliver the latest tools and resources to affiliated advisors.”

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.

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.”

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