LPL Financial and Advisor Group-owner Lightyear Capital are showing interest in buying Cetera Financial Group’s network of six independent broker-dealer firms, according to a report published yesterday by Investment News’ Bruce Kelly.
Citing anonymous sources close to the matter, Kelly reported that both firms signed confidential nondisclosure agreements to “access Cetera’s proprietary information in order to perform due diligence for a possible merger.”
Earlier this year, Bloomberg and other industry publications reported that Cetera was exploring a potential sale that could command up to $1.5 billion and had tapped investment banks to explore its options.
Shortly thereafter, Cetera disclosed a capital structure review and confirmed the retention of Goldman Sachs & Co. LLC to support the review process. At the time, the company said that the objective of the review was to optimize its capital structure, lower costs, and maximize continued investments.
Cetera’s 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.
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.