After a multiyear effort to build its wealth management business, Blucora Inc. said Tuesday it had agreed to sell its tax software business, TaxAct, for $720 million, and will rebrand the company under the name of its wealth management group, Avantax.
An affiliate of global private equity manager Cinven is the buyer of TaxAct, according to a Blucora statement. The transaction is expected to close by the end of the year.
The market welcomed the news of the company's realignment, with shares of Blucora up almost 13% in trading Tuesday morning, reaching $24.86 at 11:00 a.m. ET. Earlier, Blucora shares reached a new 52-week high of $27.50.
The Avantax wealth management franchise reported $72.6 billion in client assets at the end of September, according to the company.
Dumping the tax software business and rebranding as Avantax are the company's most prominent moves yet to focus on the wealth management business and financial advisers. In 2015, Blucora bought H.D. Vest Financial Services Inc. for $580 million. The broker-dealer, which had close to 4,500 registered reps and financial advisers who were primarily tax professionals and accountants at the time, was eventually renamed Avantax.
Since then, Blucora has made several other acquisitions of wealth management firms, which have been in high demand from private equity funds and other outside investors. In 2019, it said it was paying $180 million in stock for 1st Global Inc., an independent broker-dealer that focuses on taxes and CPAs. Since then, Blucora has started to acquire registered investment advisers, cut some low-producing advisers and boost the average revenue generated per year by its advisers.
But there have been some bumps along the way. Two years ago, Avantax Investment Services Inc., the broker-dealer, moved to create a $60 annual fee for advisers’ accounts at outside money managers, a popular way for advisers to conduct business directly with mutual fund companies like American Funds. That was unpopular with some advisers.
And last December, the Securities and Exchange Commission said it had reached an agreement with 1st Global Advisors Inc., currently Avantax Advisory Services Inc., to pay a $16.9 million penalty for failing to reveal conflicts stemming from marketing fees paid by clients for mutual funds that charge what is commonly referred to in the industry as 12b-1 fees.
"As a pure-play wealth management company, Blucora will streamline its operations and cost structure, allowing the wealth business to invest further in areas that will generate strong revenue growth and expand its margins," the company said in a statement.
“Completing this transaction will allow us to return significant capital to our shareholders and enable us to focus on our wealth management business and its extraordinary community of financial professionals and accounting firms," Chris Walters, the company's CEO and president, said in the statement. "Avantax has grown significantly over the last four years, and we are confident in our ability to deliver holistic, tax-focused financial planning and investment solutions, while also generating superior returns for shareholders."
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
A new PitchBook analysis unpacks sticking points relating to liquidity, costs, and litigation risk for would-be investors and plan sponsors.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
The collaboration will give RIAs yet another access point into the alternatives space through a new unified managed account capability.
A drop in interest rates and easier access to capital has reignited appetite among private equity-backed consolidators, who accounted for 53% of RIA deals so far this year- their highest share since 2021 according to DeVoe & Company.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
