Cetera On A Tear(a)

Cetera Holdings has successfully completed its acquisition of Avantax Inc., ushering in a new era for both companies. This strategic move has added significant assets to Cetera’s portfolio, including $82.3 billion in assets under administration and $42 billion in assets under management.

The acquisition encompasses Avantax’s legal entities, brand, core technology, product offerings, and existing clearing and custody relationships. Notably, it includes Avantax Planning Partners, a registered investment advisor (RIA) with assets totaling $7.8 billion.

One noteworthy outcome of this acquisition is the emergence of a unique Avantax community within Cetera, comprising 3,111 financial professionals. Mike Durbin, CEO of Cetera Holdings, expressed his optimism about this development, describing it as a “promising new chapter” for both organizations. Durbin emphasized that partnering with Avantax aligns with Cetera’s growth strategy,  leveraging Avantax’s capabilities to benefit financial professionals, affiliates, and their clients.

He further highlighted the synergy between the two firms in the realm of tax and wealth management, complementing Cetera’s existing tax-centric team, the Cetera Financial Specialist team. The addition of the Avantax Community provides financial professionals with another avenue for affiliation within the Cetera ecosystem.

In addition to the strategic implications for Cetera, the deal also forges a meaningful partnership with Fidelity as Cetera expands its presence as a multicustodial platform.

The acquisition, announced in September, came with a price tag of $1.2 billion, equivalent to 180% of Avantax’s 2022 revenues. The transaction received unanimous approval from Avantax’s board, and shareholders with voting rights overwhelmingly supported the deal, with an approval rate of 81%.

Avantax was previously listed on the Nasdaq stock exchange, but Cetera’s acquisition has taken the company private. As part of the transaction, holders of Avantax common stock are entitled to receive $26.00 in cash per share, subject to required withholding taxes.

However, it’s worth noting that the acquisition process has not been entirely without challenges. An Avantax shareholder initiated a lawsuit against the company, alleging inadequate disclosures related to the Cetera deal. This legal dispute underscores the complexities and legal considerations that can arise during significant corporate acquisitions.

As Cetera and Avantax embark on this new phase of their partnership, they will likely continue to navigate various operational and integration challenges while striving to deliver value to their financial professionals and clients within the ever-evolving financial services landscape.

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