Advisor Group has agreed to buy Ladenburg Thalmann Financial Services and eventually combine operations with the latter in a deal worth $1.3bn.
The consolidation, anticipated to complete in the first half of next year, will lead to the creation of a wealth manager with more than $450bn in assets.
The two parties have been in negotiations over a merger since the last few weeks.
The enlarged business will adopt a multi-brand network model, with no merger between Ladenburg’s five IBDs and Advisor Group’s four IBDs.
The merged business is said to generate annual revenues of $3bn and have an adviser count of around 11,500.
As per the agreed terms, each share of Ladenburg common stock can be swapped for $3.50 in cash per share. The total enterprise value of the deal is about $1.3 billion.
The combined group will be headed by Advisor Group CEO and president Jamie Price, and include senior executives from the two firms in the leadership team.
Price noted: “In fact, as our two organisations learned more about each other’s platforms, it became obvious that our strengths rounded out each other’s offerings, and combined, we will have one of the most comprehensive and best-in-class platforms for financial advisers in the industry.
“Equally important, Advisor Group and Ladenburg have a shared commitment to the flexibility of third-party clearing, together with maintaining a ‘small firm feel’ delivered through the distinct management teams and cultures of a multi-brand network model.”
The deal already secured the green light of the Ladenburg board and is now subject to shareholder and regulatory nod.
Custodial changes would not be required as both the companies rely on Pershing and National Financial as their clearing providers.
Ladenburg COO Adam Malamed said: “The combination of Ladenburg and Advisor Group creates a unique offering for financial advisers who are primarily fee-based, or fee-only, whether they want to have their own RIA under a turnkey level of back and middle office support, or would prefer to do fee-only work through a corporate RIA, without having to also hold securities licences on the brokerage side of our industry.”
Notably, private-equity manager Reverence Capital Partners picked a majority stake in Advisor Group earlier this year.