In further consolidation of the wealth management space, Dallas-based financial planning and wealth management firm Avantax has entered into a definitive agreement to be acquired by Cetera Holdings, expanding the firm’s wealth management ecosystem, as well as establishing a new strategic relationship with Fidelity.
According to the firm’s Sept. 11 announcement, Cetera will acquire all of the issued and outstanding equity of Avantax in an all-cash transaction valuing Avantax at approximately $1.2 billion, inclusive of Avantax’s net debt.
Following the closing, Avantax will become a standalone business unit within the Cetera family with 3,078 Avantax financial professionals, representing $83.8 billion in assets under administration (AUA) and $42.6 billion in assets under management (AUM), as of June 30, 2023.
Through the transaction, Cetera will retain Avantax’s legal entities, core technology, product offerings and existing clearing and custody relationships, the announcement further notes.
“I am extremely grateful to our extraordinary community of financial professionals as well as the entire Avantax team for their unwavering focus and steadfast professionalism throughout our transformation,” stated Chris Walters, Chief Executive Officer of Avantax. “I am confident that this combination with Cetera is beneficial for Avantax, our financial professionals, employees and stockholders.”
“As we enter Cetera’s next phase of evolution, our five-year growth strategy is off to a terrific start. Avantax will significantly build out Cetera’s capabilities in tax and wealth management,” notes Mike Durbin, who has served as CEO of Cetera Holdings since May after leaving Fidelity. “As we have said in the past, disrupting the market with expanding capabilities means more flexibility for advisors, and developing adjacent capabilities and channels expands our addressable market.”
Durbin further observes that the addition of Avantax Planning Partners—an employee-based RIA with over $7.6 billion in AUM—will complement and strengthen Cetera’s recently launched succession solution offering.
As background, Avantax has two distinct models within its business—the independent financial professional model and the employee-based model. Avantax refers to its independent financial professional model as Avantax Wealth Management, offering services through its registered broker-dealer, RIA and insurance agency subsidiaries. It also is a U.S. tax-focused independent broker-dealer that works with a nationwide network of financial professionals operating as independent contractors. The employee-based model is referred to as Avantax Planning Partners, offering services through its RIA and insurance agency by partnering with CPA firms to provide their consumer and small-business clients with holistic financial planning and advisory services.
Strategic Relationship
Notably, the acquisition will also establish a strategic relationship between Cetera and Fidelity, enabling Cetera to expand further into a multi-custodial platform and enhance Cetera’s capabilities to provide tools and functionalities for its affiliated advisors, the announcement further explains.
“We are executing against our multi-custodian aspirations, and capturing new markets and adjacencies,” emphasized Adam Antoniades, CEO of Cetera Financial Group. “We will take a thoughtful, personalized, and proactive approach with Avantax to ensure Avantax’s valued financial professionals aren’t disrupted in any way. Our tax-centric Cetera Financial Specialist team has already created a formidable presence in our industry, and we are delighted that after the closing of this acquisition, we will be able to offer all of our advisors even greater opportunities to expand into tax and accounting.”
Transaction Details
The transaction is expected to close by the end of 2023, subject to stockholder approval, regulatory approvals, and other customary closing conditions. The transaction is not subject to any financing condition. Upon completion, Avantax will become a privately held company, and its common stock will no longer be traded on Nasdaq.
PJT Partners is acting as financial advisor to Avantax, and Sidley Austin LLP and Haynes and Boone, LLP are serving as legal counsel to Avantax. Morgan Stanley & Co. is serving as financial advisor to Cetera. UBS Investment Bank and BMO Capital Markets served as co-advisors to Cetera. Willkie Farr & Gallagher LLP is serving as legal counsel to Cetera.
Acquisition Spree
This past June, Cetera Holdings announced that it had acquired The Retirement Planning Group (TRPG), an independent registered investment advisory firm headquartered in Leawood, KS. TRPG serves high-net-worth individuals, families and retirees, and managing approximately $1.4 billion in AUM across approximately 1,825 client accounts with 40 employees, including 14 advisors.
And in January, Cetera announced that it was acquiring the retail wealth business of the Securian Financial Group. As a result of that agreement, more than 1,000 financial professionals across 30 independent firms representing $47.4 billion in AUA and $24.8 billion in AUM were integrated as a distinct community, branded as Cetera Wealth Management Group, within the Cetera Advisor Networks community. The transaction also included a broad strategic partnership agreement aimed at aligning the interests of the two organizations, including an arrangement whereby Securian Financial will distribute its individual life and annuity products through Cetera's affiliated financial professionals.
As of June 30, 2023, Cetera oversees approximately $341 billion in AUA and $121 billion in AUM and is home to more than 9,000 financial professionals and their teams.
