Dallas-based Avantax announced today that it will be acquired by Los Angeles-based Cetera Financial Group.
Avantax, a $42.6 billion AUM tax planning and wealth management firm, will become a stand-alone entity under Cetera Holdings, the parent company of Cetera Financial Group, in an all-cash transaction valuing Avantax at $1.2 billion inclusive of debt, according to the news release. Cetera already operates another business unit, Cetera Financial Specialists (CFS), that caters to CPAs and other advisors who are tax specialists.
The transaction is the second major acquisition undertaken by Cetera Holdings' new CEO, Mike Durbin. He joined Cetera earlier this year after spending more than a decade at Fidelity, where he oversaw the giant investment company's technology, custody and RIA services business units at various different junctures. Last month it acquired the brokerage arm of Securian Financial.
Industry observers noted that it would make sense to merge the two tax advice-oriented business units, Avantax and CFS, though they added Cetera had experienced problems integrating operations in the past. However, Durbin is widely respected for his ability to manage large enterprises.
The transaction is expected to close by the end of 2023, according to the announcement.
Upon the closing of the transaction, Avantax, currently traded on the Nasdaq, will become a private entity and a business unit of Cetera. Shareholders of Avantax common stock will receive $26 in cash per share, subject to withholding taxes, representing an about 30% premium to the closing share price of Avantax common stock on Friday, Sept. 8, 2023.
“As we explored expanding Cetera’s capabilities into wealth management and tax expertise as a core component of our growth strategy, it quickly became clear that Avantax was an ideal target and a powerful fit for our business,” Durbin said in released comments. “As we enter Cetera’s next phase of evolution, our five-year growth strategy is off to a terrific start. Avantax will significantly build out Cetera’s capabilities in tax and wealth management. As we have said in the past, disrupting the market with expanding capabilities means more flexibility for advisors, and developing adjacent capabilities and channels expands our addressable market. This acquisition will activate this potential and represents an important milestone in Cetera’s growth trajectory.”
Avantax’s legal entities, core technology, product offerings and existing clearing and custody relationships will remain intact through the transaction, the announcement said. As of June 30, Avantax had $83.8 billion in total assets under administration across all of its business line.
“This transaction, upon closing, will deliver immediate cash value to Avantax stockholders. It is a result of Avantax’s strategic transformation and value creation efforts, which, when combined with the sale of TaxAct in December 2022, has unlocked significant value for our stockholders,” said Chris Walters, CEO of Avantax, in released comments. “I am extremely grateful to our extraordinary community of financial professionals as well as the entire Avantax team for their unwavering focus and steadfast professionalism throughout our transformation. I am confident that this combination with Cetera is beneficial for Avantax, our financial professionals, employees and stockholders.”