Reverence Capital Partners has signed a deal to buy a 75% stake in independent broker/dealer network Advisor Group. The firm’s current owners, Lightyear Capital and PSP Investments, will retain 25% of the company.
Terms of the deal were not disclosed. But according to sources within the investment banking community, the Reverence deal values the firm at somewhere between $2 and $2.5 billion.
Under the deal, Advisor Group will continue to operate independently, and its management team, including CEO Jamie Price, will remain. Valerie Brown will step down from her position as executive chairman, although she’s still an investor in the company.
Advisors who have stuck with the firm will also likely be sharing in the proceeds, via a retention program, to be rolled out to advisors in the next 30 to 60 days. Price told WealthManagement.com the program would likely be a combination of "recognition," perhaps an opportunity to invest in the firm.
“Over the past three years, part of the engine that got us here were our advisors,” Price said. “So to say thank you to them in some way, shape or form, I think, is prudent.”
Reverence Capital was one of several private equity bidders in the running to acquire the b/d network from Lightyear Capital. Centerbridge Partners was also reportedly in talks to buy the firm. Genstar Capital, which owns Cetera Financial Group, made a late attempt to bid for the firm, according to those same sources, but their offer remained far below the valuation Lightyear and PSP sought.
Reverence Capital is run by former Goldman Sachs banker Milton Berlinski. The firm’s website says it focuses on a "broad spectrum of middle-market financial services companies." It currently owns Russell Investments and Victory Capital, an investment management firm.
“Our view is, and I think the private equity view on this and smart investor view is, having scale like we do and operating with a shared central service model, which has us look like a large single company, gets the leverage of having the amount of assets that our advisors have, but we still get to operate on the ground with four unique brands and capabilities to attract different types of advisors who want to fit into various communities that look and feel like communities they want to be part of,” Price added. “I think it’s important we’re large enough to make the investments back in the business to help our advisors serve their clients.”
Advisor Group has over 7,000 advisors across four b/ds: FSC Securities Corporation, Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services. Prior to its ownership by Lightyear, it was part of AIG.
Advisor Group Timeline
January 1990: SunAmerica, an annuity-focused firm, acquires Royal Alliance Associates, Inc.
January 1996: SunAmerica acquires Advantage Capital Corporation.
October 1997: SunAmerica acquires Financial Service Corporation, the parent company of FSC Securities Corporation.
April 1998: SunAmerica acquires Sentra Securities Corporation and Spelman & Co., Inc. ("Sentra-Spelman").
August 1998: AIG buys SunAmerica for $18 billion+ in stock. The deal includes four of SunAmerica’s broker/dealers: Advantage Capital, Royal Alliance, FSC Securities and SunAmerican Securities, adding 9,500 brokers and financial planners.
February 2005: AIG forms AIG Financial Advisors Inc. with representatives coming from SunAmerica Securities Inc., Sentra Securities Corporation and Spelman & Co. Inc.
January 2006: American General Securities Incorporated joins AIG Advisor Group.
October 2008: AIG announces plans to sell AIG Advisor Group. No sale happens.
January 2009: AIG Financial Advisors, Inc. (within Advisor Group) changes its name to SagePoint Financial, Inc.
March 2009: Advantage Capital withdraws Finra registration.
2010: AIG Advisor Group is Renamed "Advisor Group."
December 2012: AIG acquires Woodbury Financial Services from The Hartford, adding 1,400 reps and $25 billion in assets under administration.
May 2016: AIG sells Advisor Group, with $160 billion in assets under administration and 5,200 independent reps, to Lightyear Capital and Public Sector Pension Investment Board.
May 9: Lightyear and PSP reach a deal to sell a 75% stake in Advisor Group to Reverence Capital Partners, a New York-based private equity firm.