Advisor Group and Ladenburg Thalmann to Merge Forces

The firms’ leaders say they have complementary capabilities and talent to enhance the combined organization’s services for advisers.

Advisor Group and Ladenburg Thalmann have announced a plan to merge, a move that will bring together more than 11,000 financial advisers and $450 billion in client assets.

News of the merger comes during what has already proven to be a record year for M&A activity among registered investment advisers (RIA) and wealth managers. According to the newly released Fidelity October 2019 Wealth Management M&A Transaction Report, the month saw 12 RIA transactions representing $9.2 billion in assets. Compared to October 2018, the number of transactions were up 33%, with a 77% increase in AUM.

Fidelity’s data shows that, year to date, there have been 106 RIA transactions representing $126 billion completed, which is up 41% in the number of transactions and 37% in AUM over 2018 YTD, and is already well ahead of 2018 totals. While there were no independent broker/dealer transactions in October, this year’s nine transactions represent $434.6 billion in assets and are already ahead of year-to-date October 2018 totals.

The newly announced merger is one of the largest for the year. Advisor Group encompasses four firms, with more than 7,000 financial advisers and $271 billion in client assets. Ladenburg Thalmann, encompassing 4,400 financial advisers, served through five wholly-owned firms, has $181 billion in client assets.

According to the firms’ leadership, the companies will form a “multi-custodial and multi-clearing network of firms” and will “support financial advisers through multiple distinct brands and cultures.” To this end, Ladenburg firms will not be merged with Advisor Group firms from a client service standpoint, “reflecting both companies’ shared commitment to a multi-brand network model.”

Under the terms of the transaction, Ladenburg has agreed to be acquired by Advisor Group through a cash merger, in which each outstanding share of Ladenburg’s common stock will be converted into a cash payment of $3.50 per share. The total enterprise value of the transaction is approximately $1.3 billion, according to the firms, taking into account Ladenburg’s common stock, preferred stock and outstanding debt. The definitive merger agreement and the transactions contemplated were unanimously approved by Ladenburg’s Board of Directors.

The transaction, which is subject to customary closing conditions, including the approval of Ladenburg’s shareholders, and receipt of required regulatory clearances and approvals, is expected to close in the first half of 2020.

Following the completion of the transaction, the expanded Advisor Group organization will continue to be led by its current CEO and President, Jamie Price.  When the transaction is completed, Advisor Group’s leadership team will include senior executives from both Advisor Group and Ladenburg. 

Advisor Group’s network of firms consists of FSC Securities Corporation, Royal Alliance Associates, SagePoint Financial and Woodbury Financial. Ladenburg’s independent advisory and brokerage firms include Securities America, Triad Advisors, Investacorp, KMS Financial Services and Securities Service Network (SSN).

Richard Lampen, Ladenburg Thalmann chairman, president and CEO, says the transaction will maximize value for shareholders while positioning financial advisers for continued growth and success.

“We are confident this transaction will help our advisers accelerate the growth of their businesses, while enabling them to benefit from the highly personalized service experience they have always enjoyed, under a very similar multi-custodial, multi-clearing and multi-brand structure,” Lampen says.

According to firm leadership, because both Advisor Group and Ladenburg use Pershing and National Financial (part of Fidelity Custody & Clearing Solutions) as their largest clearing providers, no repapering of client accounts will be necessary in connection with this transaction and its closing.