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Avantax Wealth Management

Avantax to be Acquired by Cetera for $1.2B

Avantax shareholders will be cashed out at $26 per share and the tax-focused broker/dealer will operate as separate unit within Cetera

Avantax, the $84 billion, tax-focused wealth management firm formerly known as Blucora, will be taken private in an all-cash sale to Cetera Holdings for $1.2 billion.

In a deal expected to close by the end of the year, Avantax will be de-listed from the Nasdaq exchange and become a standalone business unit within the Cetera Wealth Management Group ecosystem, with Cetera retaining the company’s core technology, legal entities, product offerings and clearing and custody relationships.

Subject to voter approval, Avantax stockholders will be cashed out at $26 per share, more than 30% over their value at the close of day on Friday. After hitting a high of nearly $30 per share in mid-February, Avantax stock has vacillated between $27 and $21 throughout 2023, posting its lowest value on Friday at just under $20.

The company’s shares jumped to $25.48 when markets opened on Monday morning with the news of the announcement.

Bloomberg first reported a potential sale back in July, after its 11th largest shareholder urged Avantax to consider such a move in June. Engine Capital cited discounted stock value, competitive positioning and unwieldy organizational structure as reasons for considering a sale to “a large consolidator.”

“After carefully evaluating how best to maximize value for our stockholders, the Board unanimously determined that this transaction is in the best interests of Avantax and its stockholders,” said Avantax Board of Directors Chair Georganne Proctor said in a statement on Monday. “We also believe that this will position the business, our people, our financial professionals and our affiliates for the future.”

“This transaction, upon closing, will deliver immediate cash value to Avantax stockholders,” added Avantax CEO Chris Walters. “It is a result of Avantax’s strategic transformation and value creation efforts, which, when combined with the sale of TaxAct in December 2022, has unlocked significant value for our stockholders.”

Avantax sold its tax software business late last year, before rebranding in January. Its wealth management business resulted from the combination of tax-focused broker/dealers HD Vest and 1st Global in 2019, creating a firm with 4,200 advisors and $67 billion in client assets. Today, Avantax stands at 3,078 financial professionals overseeing some $84 billion in client assets, a little more than half of which is managed.

“As we explored expanding Cetera’s capabilities into wealth management and tax expertise as a core component of our growth strategy, it quickly became clear that Avantax was an ideal target and a powerful fit for our business,” said Cetera Holdings CEO Mike Durbin.

Avantax Planning Partners, the firm’s $7.6 billion AUM RIA, is also expected to strengthen Cetera’s succession planning program, he noted.  

Cetera Financial Group CEO Adam Antoniades said the deal will establish a relationship between Cetera and Fidelity, furthering the firm’s multi-custodial aspirations and adding new tools and functionality.  

“We will take a thoughtful, personalized, and proactive approach with Avantax to ensure Avantax’s valued financial professionals aren’t disrupted in any way,” he said.

The transaction is subject to approval by 51% of outstanding shares of Avantax common stock.

Created in early 2010, when ING Group sold three broker/dealers to an investment fund managed by Lightyear Capital, Cetera comprises thousands of advisors overseeing around $341 billion client assets, a little more than a third of which is managed. The firm has obtained debt financing in the amount of $2.69 million to complete the Avantax acquisition.  

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