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Portfolio > Alternative Investments > Private Equity

Private Equity Firm Buys Indy BD First Allied

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Independent broker-dealer First Allied announced Tuesday that it has joined in an acquisition deal with private equity firm Lovell Minnick Partners, allowing the BD and Lovell to buy First Allied from parent Advanced Equities Financial Corp.

San Diego-based First Allied, with about 1,000 financial advisors in 500 branches located around the United States, makes up Advanced Equities’ independent brokerage group, including registered investment advisor (RIA) and wealth management businesses. Upon closing of the transaction, First Allied will be an independent company and continue to operate under the First Allied brand.

“At a time when many independent broker/dealers are challenged to find sustainable growth, First Allied continues to succeed by providing a platform that enables its affiliated advisors to grow their businesses,” said First Allied President Adam Antoniades in a statement. “Becoming a free-standing company, with the financial support of a great partner in Lovell Minnick, will provide us with additional flexibility and resources to further accelerate our growth.”

Founded in 1994 as a privately held company, First Allied in 2005 was sold to Advanced Equities by Wells Fargo.

Potential buyers for broker-dealers on the market have shrunk over the past few years, making this acquisition big news in the advisory world. Private equity and venture capital firms are the primary group of buyers right now, said Jon Henschen, head of Henschen & Associates, a recruiting firm for independent advisors in Marine on St. Croix, Minn., in this month’s issue of Investment Advisor.

“There are fewer buyers out there right now,” Henschen said. “There are just not many insurance firms looking for brokers, for instance, since many of them have gotten out of this business.”

LPL Financial was a leader in the private equity-driven sale of BDs back in 2005, when it sold a majority equity interest in the company, about 60%, to two private equity shops.

Lovell Minnick Partners is a private equity firm focused on providing buyout and growth capital to companies in the financial services industry. It has offices in Los Angeles and Philadelphia, and manages private equity partnerships totaling $800 million on behalf of private and institutional investors.

“This transaction culminates a multi-year search by Lovell Minnick to identify a strong management team and platform investment within the independent broker-dealer channel,” said Lovell Minnick Managing Director Robert Belke in a statement. “First Allied has successfully executed on a strategy focused on premium advisor service and education, and we are committed to supporting that strategy.”

Though separating to focus on their core businesses, according to the news release, the companies will continue to work together through a distribution relationship that will provide for the continued availability of Advanced Equities’ products and services to First Allied’s affiliated RIAs. 

“This transaction will allow us to focus on Advanced Equities, the business we started in 1999 and the part of the business we believe has significant upside potential for our stockholders,” Advanced Equities CEO Dwight Badger said in a statement.

No operating changes are expected to arise from the separation, and First Allied’s management team said the deal would largely be transparent to the firm’s advisors and their clients. The transaction is expected to close in the fourth quarter of 2011, subject to customary regulatory reviews and approvals.


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