Ladenburg Thalmann, which owns a group of independent broker-dealers with about 4,500 advisors, is in talks with possible buyer Advisor Group, according to Bloomberg News, which cited people familiar with the matter.
Ladenburg’s IBDs are Securities America, Triad Advisors, Investacorp, Securities Service Network and KMS Financial Services. Advisor Group, which has about 7,000 advisors, includes FSC Securities, Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services.
If combined, the two entities might encompass as many as 11,500 advisors and nine IBDs — putting it ahead of Raymond James but behind LPL Financial in terms of a total advisor headcount. Representatives for Advisor Group and Ladenburg could not be reached for comments as of press time.
“This is not a surprise given industry consolidation,” said Tim Welsh, head of the consultancy Next Strategy.
Earlier this year, the private-equity group Reverence Capital Partners bought a majority state of Advisor Group. Last year, the Cetera group of IBDs was sold to Genstar Capital.
“With the ‘race to zero commissions,’ there’s more pressure on the IBD industry,” Welsh said, as investor clients look more closely at their costs.
“A key issue then will be how [firms like Ladenburg and Advisor Group] can stay competitive — via lower costs and reduced commissions [for advisors], possibly,” he explained, noting such trends could prompt some advisors to go into the RIA channel.
Ladenburg’s revenue in the second quarter was about $360 million — on par with its current stock market valuation; it has about $177 billion in client assets. Its full-year 2018 revenues were $1.4 billion.
Firms often are sold at a price that’s 20-30% above their current share price. “You always want to get a premium,” he explained.
(Related on ThinkAdvisor: Ladenburg Thalmann Exploring Sale: Report )