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Cetera Exploring Possible Sale

Cetera Financial Group, a network of six independent broker-dealer firms, is reportedly engaging a number of investment banking firms to explore how to “optimize its capital structure at lower costs."

Cetera Financial Group, a network of six independent broker-dealer firms, is reportedly engaging investment banking firms to explore its capital structure options, including a possible sale.

While Cetera has not confirmed any potential strategic alternatives, Investment News reported that the company is exploring a potential sale that could fetch up to $1.5 billion.

“Like all healthy companies that seek to sustain their trajectory of success, we continuously examine ways to enhance our capital management structure to best align it with our ability to reinvest in our business and create added value for our advisors and other stakeholders,” a Cetera spokesperson said. “Beyond this, as a privately-held company, we do not publicly discuss or disclose details related to our capital structure.”

The broker-dealer network is comprised of Cetera Advisors, First Allied Securities, Brokerage Services, Cetera Advisor Networks, Cetera Financial Institutions, and Cetera Financial Specialists.

Cetera became an independent, privately held organization following the pre-planned bankruptcy of its former parent company, RCS Capital Corp in 2016. Robert Moore took over as chief executive officer in September 2016 after the departure of Larry Roth, who saw Cetera through the bankruptcy process.

RCS Capital was hit hard after it was revealed in October 2014 that American Realty Capital Properties, another company controlled by RCAP founder Nicholas Schorsch, intentionally left a $23 million accounting error uncorrected.

The bankruptcy terms included a recapitalization by RCS Capital’s first and second lien lenders, resulting in substantially all of the equity of the company being owned by the Carlyle Group, Fortress Capital and Eaton-Vance.

In other Cetera news, the company recently launched a two-channel organizational structure where its six firms will be organized under “traditional” and “specialty” channels. The traditional channel supports ensemble practices, producer groups and smaller advisory practices, while the specialty channel supports larger teams, financial institution-based wealth management programs, and advisors with roots in tax advisory work.

Cetera Financial Group is the second-largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions.

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