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LPL’s M&A Program Goes Live

The new service, out of its pilot stage, is now available to all LPL advisors and promises to shorten the time it takes them to complete acquisitions from six to nine months to 60 to 90 days.

LPL Financial said Thursday that its LPL Financial M&A Solutions, a suite of services to help advisors navigate mergers and acquisitions from start to finish, is now available to all of LPL's 17,287 advisors. The offering has been in a pilot program with a small group since 2019.  

LPL launched the platform to help advisors with all the issues and steps involved in a sourcing and closing acquisitions or mergers, with single point of contact on one platform. LPL will finance the deals from its own balance sheet.

The firm has shortened the time to complete deals from six to nine months to 60 to 90 days, said Jeremy Holly, LPL senior vice president and head of Advisor Financial Solutions. Holly likens it to an investment bank for their advisors.

“Most broker/dealers do financing through a couple of banks around the country that specialize in book purchase financing, but LPL, because of their scale, does the financing themselves which can offer better pricing value than banks,” said Jonathan Henschen, president of the recruiting firm Henschen & Associates in Marine on St. Croix, Minn.

The M&A offering includes three major components. The first is seller support, where the firm will help sellers find a good fit and maximize their firm’s value, as much as a 20% to 30% premium on market valuations, Holly said. LPL helps sellers understand the process and figure out why they’re selling and the types of buyers they’re looking for. LPL then goes out and curates buyers, filters and interviews them for the seller.

The second component is a buyer program aimed at helping buyers prepare for a transaction. That includes a digital community with content and strategies. LPL will help them improve their firm's value proposition, provide an annual valuation for their practice and early access to sell-side opportunities. Buyers also get discounts on LPL’s financing.

“Part of this concept about preparing a better buyer is, how do they position themselves to win?” Holly said. “A lot of folks that raise their hands to be buyers may not know exactly what it takes to set themselves apart.”

The third component is a deal execution platform, an end-to-end solution with a single point of contact to help buyers and sellers get deals across the finish line. It includes support with valuation, deal structuring, due diligence, deal documents, financing from LPL, and then actually transitioning the business. Advisors can track a deal’s progress through the technology platform.

“What we liked about the LPL platform is that it is a full turnkey program for buying and selling practices that greatly simplifies the process but also helps through their hands-on guidance, to amplify the most value on a practice sale,” Henschen said.

Holly said LPL has completed over 300 deals since the pilot was launched, and the firm has between 80 to 100 more in the pipeline at any given time.

M&A Solutions is the sixth offering in the firm’s suite of Business Solutions, which also includes The Assurance Plan, launched last summer; Administrative Solutions; Marketing Solutions; CFO Solutions; and The Digital Office, which is focused on technology/cybersecurity. The firm’s business solutions portfolio, launched over two years ago, is a suite of services that advisors can outsource to LPL experts for a monthly subscription fee, including consulting on business growth and strategy. At the end of the fourth quarter, LPL had 1,400 monthly subscriptions, double the level it was a year ago.

On an earnings conference call last week, LPL CEO Dan Arnold said the firm plans to experiment with offering its business solutions services to advisors outside of LPL. It will likely start with M&A, Holly said.

“We’ve got a really big swimming pool, if you will, 17,500 advisors—if we can attract sellers from other places outside of LPL and bring them to LPL because we’ve got a really good solution for them and we’ve got a really good set of buyers, I think that would be an easier way for us to experiment externally,” he said.

LPL’s new offering is part of a growing trend of independent b/ds providing succession planning and M&A support in-house.

Last April, LaSalle St. Securities, a midsize independent b/d, corporate RIA and insurance business in Chicago, started providing loans with zero interest rates to help facilitate its advisors’ mergers and acquisitions.

And more recently, Commonwealth formalized a succession planning and M&A capability, doing internal valuations and providing templates for deal structures. The offering also includes a more stated packaging of financing options, whether that be lending capital, growth capital or some combination of the two.

“The motivation for them creating that is they want to retain those assets inside their organization, and I think they’ve always needed to create some sort of transition opportunity to make that happen and help their existing advisors have a liquidity event,” said Scott Slater, M&A specialist and Fidelity Institutional vice president of practice management and consulting.

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