LPL, Lightyear Capital indicate interest in acquiring Cetera Financial Group

Both firms have signed confidential nondisclosure agreements, allowing them to look at proprietary information that could lead to a merger

May 15, 2018 @ 2:13 pm

By Bruce Kelly

An earlier version of this story incorrectly stated that LPL Financial had missed the deadline for signing the confidential nondisclosure agreement.

LPL Financial and Lightyear Capital, the owner of Advisor Group, are in the running to buy Cetera Financial Group, according to a source familiar with the negotiations.

LPL and Lightyear Capital have both signed a confidential nondisclosure agreement that gives them access to Cetera's proprietary information in order to perform due diligence for a possible merger, according to the source, who asked not to be identified. LPL pushed the deadline for signing the agreement but did so at the last minute, according to the source.

The identity of any other possible bidders was not known.

Cetera Financial Group is a network of 8,000 brokers and advisers registered at half-a-dozen firms.

In February, Bloomberg News reported that Cetera was exploring a sale that could fetch its private equity owners as much as $1.5 billion.

Cetera did not confirm the report, but later said it had hired Goldman Sachs & Co. to conduct an internal review with the objective of optimizing its capital structure, lowering costs and maximizing continued investments.

A spokesman for Cetera, Joseph Kuo, said in a statement Tuesday, "We are seeking to optimize our capital structure, lower our current capital costs and maximize continued investments that can drive forward our business. We can, and will be, very selective in choosing our path and any partner as part of our long-term plans."

Shortly after it was reported that Cetera might be for sale, the market began to speculate that it would make sense for LPL to acquire Cetera.

That speculation has toned down of late. Recent moves by LPL made it appear that LPL and Cetera were still in competition with each other and likely not close to a merger. For example, LPL last month introduced a new recruiting deal in the form of a three-year forgivable loan that pays an adviser 50 basis points on assets under management transferred to LPL.

LPL targeted advisers from a handful of firms, including Cetera Financial, to be eligible for the deal. That move left some to wonder why LPL would focus on recruiting advisers from a firm it intended to purchase.

A spokesman for LPL, Jeff Mochal, did not immediately respond to requests for comment.

Donald Marron, chairman and founder of Lightyear Capital, did not return calls to comment.

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