LPL Financial Holding Inc. (NASDAQ:LPLA) has announced that it has signed a definitive purchase agreement for the acquisition of Allen & Company of Florida Inc. which serves over $3 billion of client assets and has around 30 advisors.
Terms of purchase agreement
The agreement was signed on May 17 2019 and the company expects to close the deal by the end of the year subject to receiving regulatory approvals and customary closing conditions. Although LPL didn’t disclose the price of the transaction it nonetheless revealed the formula which it indicated is seven times post synergy EBITDA. The agreement will create considerable synergies through a back and front office on LPL thus gaining from its economies of scale.
Terms of the deal indicate that LPL will bring on board the advisors and staff of Allen and Company as employees as well as maintain their operations and brand. The acquisition agreement gives an initial purchase price with future contingent payment dependent on the Allen’s client assets that will be brought on board of LPL’s custodial platform.
Adding employee channel as a strategic consideration
This is seen as the start of LPL into the employee model as one of their strategic considerations. LPL has already confirmed that it focusing on employee channel by informing investors that the company plans to add the employee channel. A spokesman indicated that although the company has not traditionally taken part in an employee channel that thinking is changing and the company wants to reserve independence principles as well as have services of employees around it.
LPL CEO and Financial President, Dan Arnold stated that they were delighted that Allen &Company had chosen to be part of LPL. He added that LPL’s main focus is on M&A opportunities that will help position the company financially, strategically and operationally and Allen &Company seems to be the perfect choice in all fronts. Arnold said that with the great resources that Allen & Company brings will enable the company serve clients, communities and employees better.
Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with our FREE daily email newsletter.