Two top B-D executives behind SPACs to buy RIAs and fintechs

Mark Casady, the former CEO of LPL Financial, and Larry Roth, ex-CEO of both Cetera Financial Group and Advisor Group, have prominent roles at two new companies that recently raised millions of dollars to chase deals in the red-hot M&A markets for fintech firms and registered investment advisers.

Both are long-standing and senior leaders in the independent broker-dealer industry with ties to the biggest broker-dealers and most senior advisers across the industry.

The companies they are now involved in are known as "special purpose acquisition companies," or SPACs, which are also dubbed blank-check companies. According to a report from MarketWatch, SPACs are shell vehicles that raise cash on the stock market to buy private companies, usually within two years, which they eventually take public.

For 15 years, Casady was a senior executive at LPL, serving as its chairman and CEO from 2005 to 2017, when he left the firm. He was at the helm when LPL did its initial public offering in 2010.

From 2006 to 2013, Roth was CEO of AIG Advisor Group, now Advisor Group, and from 2014 to 2016 he was CEO of Cetera.

Casady is the executive chairman of Lefteris Acquisition Corp., which raised $200 million in its IPO in October. Lefteris intends to target technology firms in three spaces, according to a filing with the Securities and Exchange Commission: traditional financial services, or fintech; regulatory and compliance, dubbed regtech; and insurance services, called insurtech.

"Amid an increased level of sophistication in financial technology and services, we believe that there are many potential targets within the financial services industry that could become attractive public companies, and that many other potential targets will continue to emerge," according to the SEC registration statement from Lefteris, whose ticker symbol is LFTRU.

Casady did not respond to messages on Wednesday to comment.

Meanwhile, Roth is lead independent director at Kingswood Acquisition Corp., which raised $115 million from its IPO last Tuesday. It is backed by Kingswood Holdings Limited, a United Kingdom-based money manager with $6 billion in client assets, and has recently expanded into the United States. The SPAC's ticker symbol is KWAC.

"The goal is to buy one large quality branded firm and over time grow it organically, and buy smaller firms after that," Roth said in an interview. "But the first deal needs to be of size, in the neighborhood of $20 billion in assets but it could be bigger." He added that there were 50 to 100 potential target RIA firms that fit the profile.

RIA M&A is red-hot, with a record year in 2019. Deal-making stalled early on this year because of COVID-19, but it has since picked up.

"The next phase for the really large, high-quality RIA firms is to operate in the public, listed company environment under one firm and one management team and over time becoming an international business," Roth added.