B-D network Wentworth closes deal to go public

Wentworth Management Services, a broker-dealer aggregator with four firms and 1,900 financial advisors, and Kingswood Acquisition Corp., a special purpose acquisition company, said Tuesday they had closed their merger, which was first announced almost two years ago, and will begin trading as Binah Capital Group on the Nasdaq with the ticker BCG.

The broker-dealer network has approximately $23 billion in assets under management and a pro forma enterprise value of $208 million, making it a microcap company that will have very little, if any, meaningful trading volume.

It's been boom times for mergers and acquisitions in the wealth management industry for more than a decade, with private equity and public company buyers snapping up broker-dealers and registered investment advisors.

But some firms, including Wentworth Management Services, have chosen to go the route of an initial public listing, which can at times be difficult for firms, particularly smaller players like the new Binah Capital Group, to gain momentum.

As a means to purchase other broker-dealers or RIAs, public company stock can be a useful tool, industry observers noted. And many believe that there will be no slowdown in M&A for wealth management firms over the next five years as investors continue to chase the steady cash flows generated by annual fees charged on client assets.

There's room in the marketplace for a publicly traded network of independent broker-dealers, particularly as larger firm like Ladenburg Thalmann Financial Services Inc. and National Securities Corp. have been acquired in the past few years, Craig Gould, CEO of Binah Capital and former president of Wentworth Management Services, said in an interview Tuesday afternoon.

"We think using the public markets will be our opportunity," Gould said, noting that public companies can use their stock, as well as ready access to public markets to finance deals, which are approaches a small, private RIA can't access.

"We started Wentworth in 2017 and have grown it through a series of acquisitions," he said. "The ability to have stock as a currency plus public markets for capital gives us greater certainty to close transactions.

"As the industry consolidates, private competitors will still have to struggle about how to close that deal," Gould said. "And we think there’s a lot of runway for us to be able to build the broker-dealer network. As we worked on this public offering for more than two years, others have approached us and asked if we are acquisitive."

He added that LPL Financial Holdings Inc.'s acquisition over the winter of Atria Wealth Solutions Inc. was an indication of the market for smaller to midsize broker-dealers. Atria was a collection of about half-a-dozen such firms.

The four firms that comprise the Binah Capital network are: Purshe Kaplan Sterling Investments Inc., Cabot Lodge Securities, World Equity Group Inc., and Broadstone Securities.

David Shane has been named Binah's chief financial officer, and the remaining members of Wentworth's management will work in leadership roles at Binah.

Meanwhile, industry veteran and senior brokerage executive Larry Roth will not be the company's executive chairman, as was announced at the end of 2022. Roth, a managing partner at RLR Strategic Partners, is stepping back due to other commitments, but remains a shareholder in Binah Capital, according to an industry source.