HD Vest, which has about 4,500 affiliated independent-contractor advisors, is being sold to Blucora (BCOR), the company formerly called InfoSpace and maker of the TaxACT tax-preparation software, for about $580 million. The deal is expected to close either late this year or early next year.
For the past four years, HD Vest has been owned by an private equity investor group led by Parthenon Capital Partners; the group includes Lovell Minnick Partners and Fisher Lynch.
“Part of the reason they wanted to partner with HD has to do with unlocking the value of their 5.5 million customers who do tax returns with TaxACT each year,” said HD Vest President and CEO Roger Ochs in an interview with ThinkAdvisor.
The TaxACT client base includes a large number of millennial users, Ochs said, so “as they enter into life changing events … they might need the help of a live, local advisor to navigate their financial plans.”
In addition, about 450,000 TaxACT users have over $100,000 in yearly income, and 28,000 earn more than $250,000 per year. “These clients have sufficient funds for financial-planning opportunities. They could be an ideal prospect for our advisors,” he added.
Much of the business growth expected by both partners will come via the data mining of tax returns, which HD Vest already does today, according to Ochs.
“The difference is that now we are part of a larger public company with access to the public capital markets. Our advisors can buy our stock, too,” he said. “It’s exciting. It’s something we have been thinking about for a while. In addition, it should help our recruiting efforts, as advisors see where potential business generation and leads can come from.”
For its part, Blucora sees the arrangement as “a transformative acquisition,” according to President & CEO Bill Ruckelshaus, in a statement. “HD Vest and TaxACT operate in adjacent markets with complementary solutions.”