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Advisor Group Reportedly Up for Sale

February 6, 2019

The private equity firm Lightyear Capital is actively looking for a buyer for Advisor Group, according to news reports.

Lightyear has brought on Barclays to advise on the sale, PE Hub reports. The news comes just three years after Lightyear bought Advisor Group, according to the private equity news website.

Several investment banking sources confirm the hiring of Barclays, according to FA magazine. But Advisor Group executives issued a very short statement essentially saying Barclays has been their advisor for a long time, the publication writes.

“We are not going to respond to continued speculation,” a spokesperson said, according to FA magazine. “Barclays was hired for our debt offering in August and continues to be our advisor.”

Investment banking sources told the publication last month that private equity firm Genstar Capital was in serious talks to buy a more than 50% stake in Advisor Group, but the group’s CEO told the publication at the time that there were no serious discussions with Genstar or any other firm, and a Genstar spokesman declined comment to the magazine.

That deal would have purportedly valued Advisor Group at $2 billion to $2.3 billion, FA magazine writes. And the deal Lightyear and Genstar negotiated would have merged Advisor Group with Cetera Financial Group, creating a mega broker-dealer with almost 16,000 registered representatives and around $3.6 billion in revenue, according to the publication. Genstar acquired Cetera last year for $1.75 billion.

That figure may have eventually contributed to the alleged talks falling apart: A private placement banker who requested anonymity tells FA magazine the valuation was viewed as “very pricey.”

Genstar purportedly learned it would run into financial issues in the Advisor Group acquisition, and asked Lightyear to renegotiate, offering other options including leaving a larger minority stake to Lightyear, a reduced valuation of the group or a restructuring of the deal to extend the payment schedule, the publication contends. But Lightyear reportedly refused to buckle and hired Barclays instead, according to FA magazine.

“When you’ve had a potential deal like this fall through, it’s a natural time to test the waters to get a sense of what the market feels the business’ true valuation is,” an unnamed investment banker tells the publication.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.
  • To read the PE Hub article cited in this story, click here.