LPL picking up another small broker-dealer

LPL picking up another small broker-dealer
The IBD intends to buy E.K. Riley Investments, its second announced acquisition in a month
MAY 27, 2020

For the second time in a month, LPL Financial said it intends to buy the assets of a small broker-dealer, this time E.K. Riley Investments, which also had a registered investment adviser business. Based in Seattle, E.K. Riley has about 35 advisers and $2 billion in client assets.

At the end of April, LPL said it was acquiring Lucia Securities, a San Diego broker-dealer that also had an RIA. LPL's purchase of both firms is characterized as an "asset purchase." In such transactions, the buying firm pays for the advisers and client assets but limits its exposure to liabilities and expenses stemming from the broker-dealer.

Specific terms of LPL’s purchase of E.K. Riley were not disclosed, but LPL said in a statement that the asset purchase agreement includes both a payment at closing, expected in the second half of 2020, and potential contingent payments. LPL said it estimated a transaction multiple of approximately six times post-merger EBITDA, or earnings before interest, taxes, depreciation and amortization.

With more than 16,000 reps and advisers, a significant part of LPL's ongoing growth strategy is broker-dealer acquisitions, noted LPL's CEO Dan Arnold, during a conference call last month with analysts to discuss first quarter earnings.

Fallout from COVID-19 could create opportunities for big firms like LPL to make acquisitions, Arnold said.

“This climate may also create more M&A opportunities, and our approach here remains the same,” Arnold said. “We are interested in firms that are aligned strategically, financially and operationally and we're starting to see opportunities materialize like the acquisition of Lucia Securities.”

“In environments like [the one] we're coming out of, we would anticipate, based on what history would tell us is, that there would be demand and opportunity for continued consolidation within that segment of the marketplace,” he said. 

Latest News

More Americans are invested in the elections than the stock market
More Americans are invested in the elections than the stock market

A substantial number of people in a new 2,200-person survey believe their wealth, their "wallet power" and their retirement timelines are at stake.

Stocks rally to fresh highs as JPMorgan drives bank gains
Stocks rally to fresh highs as JPMorgan drives bank gains

The S&P 500 headed toward its 45th record in the year helped in part by a surprise interest income gain at the Wall Street giant.

Boosting payouts on cash crimps wealth management at Wells Fargo
Boosting payouts on cash crimps wealth management at Wells Fargo

Meanwhile, Wells Fargo’s WIM group reported close to $2.3 trillion at the end of last month.

Another AI-washing case shows where SEC is headed
Another AI-washing case shows where SEC is headed

The Securities and Exchange Commission has focused on "black-and-white" allegations of AI washing, but that could broaden out to a gray area that may loop in more financial services companies, a lawyer says.

High-net-worth giving splits along generational and gender lines, find BofA survey
High-net-worth giving splits along generational and gender lines, find BofA survey

More than nine in 10 HNWIs prioritize charitable giving, but demographics help shape the whys and the hows.

SPONSORED Destiny Wealth Partners: RIA Team of the Year shares keys to success

Discover the award-winning strategies behind Destiny Wealth Partners' client-centric approach.

SPONSORED Explore four opportunities to elevate advisor-client relationships

Morningstar’s Joe Agostinelli highlights strategies for advisors to deepen client engagement and drive success