To help facilitate its advisors’ mergers and acquisitions, LaSalle St. Securities, a midsize independent broker/dealer, corporate registered investment advisor and insurance business in Chicago, is providing loans with zero interest rates.
“We see it running as a counter trend to what’s going on within the industry, at other firms,” said Mark Contey, the senior vice president of business development for LaSalle St., which supports 300 advisors and manages $10 billion in total assets. “We believe advisors need better solutions. We’re putting a stake in the ground around prevailing logic that you can only properly service advisors if you’re a very large or private equity backed firm."
Advisors looking to scale usually turn to larger IBDs, private equity firms or outside loan matching platforms to acquire another book of business.
LaSalle’s Zero-Rate M&A Loan Program eliminates the fees and additional paperwork associated with private equity loans or other IBD lenders. The loans range from $250,000 to $750,000 and include zero markup fees. LaSalle will furnish the loans from its capital reserves.
There are multiple ways to repay the loan, one of them being through the acquisition of the selling advisor’s book of business. Contey declined to specify other types of repayment but said LaSalle would provide flexibility as the needs of each opportunity may vary.
“There are so many advisors looking to acquire businesses and looking for a firm that will partner with them—supporting that venture—so, this provides a differentiated solution that will allow LaSalle to highlight how they can partner with the advisors,” said Jeff Nash, the CEO of consulting firm Bridgemark Strategies. Nash also expects the offer to attract new advisors.
"For advisors looking to acquire businesses—clearly advisors who are aggressively looking to grow—LaSalle St. is now creating a more creative reason for those advisors to join their firm,” he said.
Matt Lynch, managing partner at Strategy and Resources, also sees LaSalle's loan program as "creative," adding he's seen other firms offer forgivable loans, as well.
LaSalle will also provide consulting services for advisors who need assistance identifying the right selling firm and then help assess the valuation of that practice's book of business. Once the transaction is completed, advisors will receive assistance onboarding the new clients. After the acquisition, the selling advisor can stay on LaSalle’s platform to see the deal through, according to the firm.