Edelman Financial to Be Sold to Private Equity Group

Deal calls for the firm to be acquired and privatized for $258 million

Ric EdelmanThe well-known—and controversial—advisor, radio and television personality Ric Edelman (left) announced Monday that his Edelman Financial Group has entered into a merger agreement with Lee Equity Partners, a private equity firm, and will be acquired and privatized for $8.85 per share in cash, or about $258 million. The amount represents a premium of 43% over TEFG’s closing price Friday of $6.18, and a premium of 33% over TEFG’s volume-weighted average closing price over the last 20 trading days, according to the company. 

"They approached us several years ago and we spoke with them again last summer," Edelman told AdvisorOne. "We had three businesses we were involved in a while back which we no longer have, so they like the direction in which the firm is going. You'll have to ask Lee, but I think they like what we do and how we do it."

Edelman and co-CEO George Ball, along with other members of the company’s senior management, will continue in their roles with the company after completion of the transaction, which Edleman calls "business as usual." They will also maintain a “significant equity investment in TEFG.”

“The Edelman Financial Group has achieved a strong track record and is a clear leader in the independent financial advisor field,” Thomas Lee, president of Lee Equity Partners, said in a statement. “We are excited to partner with Edelman Financial’s management team and we look forward to supporting the company’s continued expansion.”

Edelman announced last October that it planned to stop serving independent reps by year-end so that it could focus on its core business of serving high-net-worth clients. It served registered reps through the independent brokerage firm SMH Partners, which only contributed about 2% to Edelman Financial’s EBITDA.

“The independent representative sector does not generate a return on sales equivalent to that which we enjoy in our core operations,” Ball said at the time.

Under terms of the merger agreement, each issued and outstanding share of TEFG’s common stock will be cancelled in exchange for the right to receive $8.85 in cash, except for certain shares beneficially owned by management and TEFG employees that will be rolled over and contributed to the new holding company, and shares held by shareholders who properly exercise and perfect appraisal rights.

The merger agreement must be approved by a two-thirds majority of the outstanding shares of TEFG’s common stock and by a majority of the outstanding shares of TEFG’s common stock held by unaffiliated shareholders.

The proposed transaction is expected to close in the third quarter.

Following completion of the transaction, TEFG will become a privately held company and its stock will no longer trade on the NASDAQ Stock Market.

Ric Edleman’s television series, The Truth About Money with Ric Edelman, airs on select public television stations and his syndicated radio program is heard in 54 markets. He is also the author of seven books.

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