From the December 2005 issue of Investment Advisor • Subscribe!

Ownership Shift at LPL

Broker/dealer sells a 60% stake to two private equity groups

In a move that allows the founders to diversify their holdings and appraises one of the largest U.S. independent broker/dealers at $2.5 billion, Linsco/Private Ledger (LPL Financial Services) is selling a majority equity interest in the company, about 60%, to two private equity shops. Hellman & Friedman LLC, and Texas Pacific Group (TPG) will share equally in the majority stake, with the deal slated to close by the end of the year.

"It is a very elegant solution to [issues regarding] both succession and liquidity for financial planning reasons," says Mark Casady, president and CEO of Boston and San Diego-based LPL. "Much like our advisors, our founders have really all of their assets in the company's stock, and this allows us to give them diversification by having the private equity investors step into their shoes, so to speak," he says. "Each of the three founders who are receiving some cash in this deal will also continue to be shareholders in the company. In fact, Todd Robinson [LPL's founder and current chairman] was the largest individual shareholder before this transaction and he'll be the largest individual shareholder after the transaction, so it's not a complete cash-out by any means." The move will also help LPL "institutionalize" the firm, according to Casady, taking it "from individual ownership to corporate ownership."

San Francisco-based Hellman & Friedman invests in financial services and other industries. Among the firm's financial holdings is a stake in the Nasdaq Stock Market. Former NASD Chairman Frank Zarb is a Hellman & Friedman senior advisor and managing director.

TPG is based in San Francisco, London, and Fort Worth, Texas. The firm invests in several industries and among its financial services holdings is a stake in SunGard Data Systems, Inc.--Kathleen M. McBride

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