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Avantax Wealth Management

Golden Gate Capital Makes a Bid for Blucora's Avantax Wealth Management

Private equity firm Golden Gate Capital approached Avantax last week, Bloomberg reports, but it's unknown whether the firm will consider a deal.

Just ahead of Blucora’s shareholder vote on Wednesday, private equity firm Golden Gate Capital submitted a proposal to acquire Avantax Wealth Management, the tax-centric broker/dealer owned by Blucora, according to an April 20 Bloomberg report.

Golden Gate approached Blucora last week, according to Bloomberg, which cites people familiar with the matter. The publication said it could not learn a potential valuation for the wealth management business, which was created from the acquisitions of HD Vest and 1st Global, and it’s unknown whether the firm is considering the bid.

A spokeswoman for Golden Gate declined to comment. A spokesman for Blucora did not return a request for comment by press time.

The publication estimated that the private equity firm owned a 1.3% stake in Blucora at the end of December.

Blucora started out as a technology company in the dot-com era, first called Infospace, a content provider to websites and an early search engine. The firm went through many iterations before buying the online tax preparation company TaxAct in 2012 and changing its name to Blucora. Technology for tax professionals became the main business, and a move to the broker/dealer space with tax-centric firms became the opportunity. 

Blucora purchased H.D. Vest, founded over 35 years ago by a CPA, in 2015, for $580 million. It then acquired 1st Global, which was established over 25 years ago with a focus on larger CPA practices, in 2019, for $180 million. Together, the firms now have about 3,700 advisors. The company combined the two b/ds under the Avantax name in September 2019.

In mid-March, RIA and investor Ancora started a public proxy battle with executives of Blucora. Ancora argued Blucora was mismanaging Avantax, resulting in a net loss of 100 advisors over the previous year and over 700 advisors over the past five years.

But on Wednesday, Blucora shareholders voted to reelect all 10 of the company’s existing directors by a wide margin.

“We thank our fellow stockholders for their engagement and support in recent weeks," Ancora said, in a statement. "Although we are disappointed with the outcome of this contest, we are committed to remaining an engaged stockholder of Blucora. We urge the board of directors to reflect on the pressing issues at hand and objectively assess all paths to unlocking value. In light of the strategic interest in the company, as recently reported by Bloomberg News, we expect the board of directors to thoroughly evaluate any bonafide offers for the company (in whole or its parts).” 

In interviews with WealthManagement.comadvisors who recently left Avantax said service levels suffered, payouts declined and fees rose after Blucora acquired and combined their broker/dealers.

But Avantax President Todd Mackay said the firm’s financial advisors are his top priority, and they have direct access to him and his leadership team. He said the firm has implemented several ways for advisors to provide feedback and influence change at the broker/dealer, and it’s investing heavily in service and technology. For example, Avantax recently announced its acquisition of GuideVine Technologies, a lead-generation and marketing technology platform for financial advisors launched in 2014.

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