Schorsch teeing up another possible broker-dealer acquisition

Real estate tycoon's B-D has "exclusivity agreement" to negotiate with one firm, according to SEC filing

Apr 8, 2014 @ 2:57 pm

By Bruce Kelly

Nicholas Schorsch has yet another potential broker-dealer acquisition teed up. All he's waiting for is his $1.15 billion purchase of Cetera Financial Group to close.

According to a filing with the Securities and Exchange Commission for Mr. Schorsch's broker-dealer, RCS Capital Corp., the firm expects to continue in negotiations to acquire additional businesses. In fact, it has an “exclusivity agreement” for negotiating with one unnamed firm, according to the filing, a registration statement of securities from March 19.

Matt Goldstein, an RCS Capital spokesman, said the firm had no comment about the SEC filing or potential acquisition target.

Mr. Schorsch over the past five years has turned the once-clubby nontraded real estate investment trust industry on its head, delighting advisers and investors with a speedier return of their capital than typical in the industry. He is chairman and chief executive of American Realty Capital, a nontraded REIT sponsor that has executed liquidity events for five nontraded REITs since 2012 and another slated for next week.

But Mr. Schorsch, executive chairman of the board of RCS Capital, last year pivoted toward the independent broker-dealer industry, which is often maligned as a low-margin business.

RCS Capital went public last June. Days later, a related company, RCAP Holdings, announced its first acquisition, saying it intended to purchase First Allied Holdings Inc. In total, RCS Capital and related entities have announced five broker-dealer acquisitions, creating a network of 8,900 financial advisers producing about $1.7 billion in total annual revenue.

RCS Capital announced its acquisition of Cetera, its biggest, in January. At the time, the company said that the closing of the Cetera transaction was subject to regulatory approval and was expected to close later this year.

First Allied, however, is the only deal to have closed. The others are pending, and that is putting a crimp in Mr. Schorsch's plans for growth.

“Consistent with our focus on completing the pending acquisitions, we have committed not to enter into any such potential acquisition until after the consummation of the Cetera acquisition,” RCS Capital said in its SEC filing. “As a result of this commitment, we have not entered into definitive agreements with one such potential acquisition target. This party has agreed to an exclusivity agreement with us expiring on April 30, 2014, which may be extended by us to June 30, 2014.”

The company has paid the unknown firm $1 million and placed another $3 million in escrow, “all or part of which may be payable to the other party if we do not agree to recommence good-faith negotiations for a potential transaction by the applicable deadline,” according to the filing.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Martin Dempsey: Geopolitical hotspots (and how they could impact investing)

What are the big international hotspots and how could it affect advisers and investors. Gen. Martin Dempsey, the former chairman of the joinst chiefs of staff, offers his unique perspective.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Broker, retirement groups make last-minute pleas to change tax legislation

Pass-through provisions are target of groups representing employee-model brokerage firms, as well as retirement plan advisers.

House and Senate reach tentative compromise for tax overhaul

Lawmakers still need to get a cost analysis of their agreement, so it's not yet definite, according to a source.

Advisers' biggest fears for 2018

What keeps advisers up at night.

One adviser's story of losing his son to the opioid epidemic

John W. Brower, president and CEO of JW Brower & Associates, shares the story behind his son's death from a heroin overdose and how it inspired him to help others break the cycle of addiction.

Tax reform will boost food, chemicals, rail stocks. Technology? Not so much

Conagra and Berkshire Hathaway are two stocks that should benefit most from changes in the tax code.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print