H.D. Vest to be acquired by Internet company Blucora for $580 million

Blucora is willing to pay big premium to align independent broker-dealer with one of its current businesses, TaxACT, an online tax company.

Oct 14, 2015 @ 10:38 am

By Bruce Kelly

In the largest independent broker-dealer acquisition of the year, H.D. Vest Financial Services Inc. said Wednesday it was being acquired by Blucora Inc., a company that focuses on Internet businesses, for $580 million.

H.D. Vest has close to 4,500 registered reps and financial advisers who are primarily tax professionals and accountants. Those advisers manage more than $36 billion in client assets.

H.D. Vest's price tag represents a significant premium. The firm produced $304.8 million in total revenue in 2014, according to the most recent survey of independent broker-dealers by InvestmentNews. That means Blucora is paying almost twice H.D. Vest's top line. IBDs have traditionally been valued at 30% to 60% of a firm's annual revenue.

(More: Cost pressures compel $24 billion B-D to sell stake to PE firm)

With its acquisition of H.D. Vest, Blucora is muscling into the financial advice business. In a news release, Blucora said it expects to align H.D. Vest with one of its current businesses, TaxACT, an Internet tax company.

“The acquisition will bring together HD Vest and TaxACT, the U.S. leader in low-cost tax preparation, representing substantial cross-selling opportunities and an expanded addressable market for both companies,” according to Blucora. “With access to TaxACT's 5.5 million tax filers and 19,500 professional tax preparers, HD Vest will be well-positioned, through its advisers and wealth management solutions, to offer retirement and investment products to TaxACT customers.”

This is the third time since 2001 that H.D. Vest has been sold. In 2001, founder and owner Herb D. Vest sold his firm to Wells Fargo for $128 million. Then, in 2008 private equity firms led by Parthenon Capital Partners bought H.D. Vest from Wells Fargo for an undisclosed amount.

“With Blucora, we have found a partner that recognizes the value-creating potential in our size, scale and growth prospects,” said H.D. Vest CEO Roger Ochs in the news release. “I look forward to leading H.D. Vest with a financially strong parent company, and a strategically aligned business in TaxACT.”

Blucora said it will explore the divesture of two of its businesses, Infospace and Monoprice, by the first half of 2016. The company changed its name in 2012 from InfoSpace, which was founded in 1996 by former Microsoft engineer Naveen K. Jain, who was ousted as its CEO 2002.

InfoSpace was a major player at one time in online search and information services, selling everything from classified ads, news, shopping and other content to America Online and other customers. E-commerce company Monoprice was acquired in 2013 and online content provider HowStuffWorks in 2014.

The transaction is expected to close in late 2015 or early 2016, subject to customary closing conditions and regulatory approvals.

Bloomberg News contributed to this story.


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