Schorsch snaps up Summit for $49M

Latest deal is third in six months for his firms; says he wouldn't rule out a fourth acquisition of a B-D

Nov 18, 2013 @ 9:35 am

By Bruce Kelly

nontraded REITs, broker-dealer, Nick Schorsch
+ Zoom
(Bloomberg News)

Nicholas Schorsch and RCS Capital Corp. continue their blistering pace of broker-dealer acquisitions, this morning announcing the purchase of Summit Financial Services Group Inc.

RCS Capital, which is publicly traded with the symbol RCAP, is paying $49 million in cash and stock for Summit Financial, according to a filing this morning with the Securities and Exchange Commission.

Summit Financial controls the independent broker-dealer Summit Brokerage Services Inc. That firm was started about 10 years ago and controlled by Marshall Leeds.

In 1999, he sold JW Genesis Financial Group Inc., an independent broker-dealer, and its clearing operations, to First Union Bank for $170 million. After several mergers, that broker-dealer is now Wells Fargo Advisors Financial Network.

Summit had 374 producing representatives at the end of last year, and the firm produced $74 million in gross revenue.

Until this year, Mr. Schorsch was best known for shaking up the nontraded real estate investment trust industry for implementing shareholder-friendly practices across several REITs he controls. This year, he has broadened his scope in the financial services industry and pushed into independent broker-dealers.

Through various entities he controls, Mr. Schorsch has purchased First Allied Securities Inc. and Investors Capital Holdings Inc. After the acquisition of Summit, he will have a network of about 2,300 registered reps and financial advisers.

In an interview Monday, Mr. Schorsch said that he wouldn't rule out a fourth acquisition of an independent broker-dealer, though he stressed that organic growth at the businesses that he has bought is as important as growth through mergers and acquisitions.

"We are not exclusively focused on M&A," he said.

"Is this our last independent broker-dealer? I can't answer," Mr. Schorsch said.

"We continue to look at opportunities as they come, including wholesale broker-dealers, retail firms and insurance company firms," he said.

Mr. Schorsch said that the acquisition of Summit Brokerage, which is based in Florida, complements the geography of the back office operations and advisers of Investors Capital Corp., which is based outside Boston.

The two firms operations' "are spread up and down the East Coast," he said.

Like the parent company of Investors Capital Corp., Investors Capital Holdings Ltd., Summit Financial Services is a publicly listed, microcapitalization stock. Its market cap after the announcement of the merger was about $26 million, about half that of Investors Capital Holdings.

RCS Capital is paying about $1.43 a share for Summit.

Following the merger, Summit and its various subsidiaries will continue to operate under the Summit name. The transaction is expected to close in the first quarter next year.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Creating client events with a 'wow'

Financial adviser Ryan Furstenau has turned his passion for Dodge Vipers into new clients. Learn about his event and how it has helped him prospect in a small community.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

Flows to advisory accounts, while still higher than the start of 2016, dropped off more than 20% from Q2 and were the lowest in a year.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print