LPL Financial (LPLA) to Buy Atria Wealth Solutions, Stock Up
Shares of LPL Financial Holdings LPLA gained 2.5% on the announcement of its planned acquisition of Atria Wealth Solutions, Inc. This move underscores the company’s commitment to expanding its reach and enhancing its offerings in the wealth management solutions market.
Atria Wealth Solutions, based in New York, boasts a network of almost 2,400 advisors and serves around 150 banks and credit unions, managing an impressive $100 billion in brokerage and advisory assets. Notably, brokerage accounts comprise nearly 80% of the firm’s assets, with the rest in advisory holdings.
The acquisition aligns with LPL Financial's goal to empower independent financial advisors and institutions nationwide by providing them with comprehensive support and resources. The agreement involves acquiring Atria Wealth Solutions’ broker-dealers, which include subsidiaries catering to both independent financial professionals and banks/credit unions.
LPL Financial will pay $805 million upfront, with the potential for additional "earn-outs" of up to $230 million, contingent upon the retention of advisors by Atria Wealth Solutions through the deal's closure in the third quarter. The full conversion is expected to be completed by mid-2025. The deal is subject to regulatory approval and other closing conditions.
Moreover, there are expected onboarding and integration costs, totaling between $300 million and $350 million. Despite these expenses, the long-term financial projections are promising, with LPLA anticipating additional earnings of $140 million annually from the deal.
LPL Financial plans to finance the transaction with a combination of cash and debt. Further, in order to “maintain a strong and flexible capital position”, the company has paused share repurchases till the completion of the deal. Thereafter, it will “evaluate restarting share repurchases.”
Following the closure of the deal, LPL Financial will operate Atria Wealth Solutions as a standalone entity before integrating its operations with its own, consolidating the seven brokerages under its umbrella. With a focus on putting advisors at the forefront, the company aims to provide enhanced capabilities, technology and services to drive success for its advisors and institutions.
Conclusion
The planned acquisition of Atria Wealth Solutions builds upon LPL Financial's previous successful ventures, including the acquisition of National Planning Holdings and Waddell & Reed in 2017 and 2021, respectively. Alongside these major deals, the company has pursued smaller deals, such as Crown Capital Securities and Financial Resources Group Investment Services, showcasing a consistent inorganic growth strategy.
Additionally, in December 2023, LPL Financial bought a minority stake in Independent Advisor Alliance, a hybrid registered investment advisory (RIA) firm. The deal is among the very few transactions wherein LPLA has taken a minority stake in a hybrid RIA and office of supervisory jurisdiction.
The acquisition of Atria Wealth Solutions represents a significant milestone for LPL Financial. With a robust financial outlook and a history of successful acquisitions, the company is poised for sustained growth and innovation in the wealth management industry.
Shares of this Zacks Rank #3 (Hold) company have rallied 16% over the past six months, outperforming the industry’s growth of 9.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Similar Moves by Other Finance Firms
This January, Webster Financial WBS completed the acquisition of Ametros Financial Corp to broaden its financial services portfolio. Ametros, one of the country’s largest professional administrators of medical insurance claim settlements, will maintain its operations under the Ametros and CareGuard brands.
This acquisition positions WBS to tap into Ametros' rapidly growing source of low-cost, long-duration deposits. The addition of Ametros to Webster's offerings not only enhances its deposit diversity but also introduces a new stream of non-interest income. With plans for a full integration during the first quarter of 2024, this move reinforces the company’s commitment to strategic expansions.
In order to meet increasing investor demand and expand in the alternative investments space, SEI Investments Company SEIC acquired Altigo in December 2023. Altigo is a cloud-based technology platform that provides inventory, e-subscription and reporting capabilities for alternative investments.
SEIC is a leader in supporting sponsor firms’ operational and information needs. With the integration of Altigo within SEIC’s capabilities across intermediary wealth channels, the company will be able to deliver a broader end-to-end solution.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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