RCAP Holdings said on Wednesday that it has signed a merger agreement to acquire all of the outstanding equity of First Allied Holdings, a San Diego, CA-based independent retail financial services organization. This merger also includes The Legend Group, a subsidiary of First Allied. No financial terms were disclosed. Also, as part of the transaction, Lovell Minnick Partners will sell its majority stake in First Allied and retain a minority interest in the combined company.
NEW YORK & SAN DIEGO–(BUSINESS WIRE)–RCAP Holdings, LLC (RCAP Holdings), a holding company managed by Nicholas Schorsch, William Kahane, Michael Weil, Peter Budko and Brian Block, announced today that it has signed a definitive merger agreement to acquire all of the outstanding equity of First Allied Holdings Inc. (First Allied), a premier independent retail financial services organization. First Allied, together with The Legend Group, serves over $32 billion in assets across 300,000 clients, 1,500 independent financial advisors and 500 branches in the United States. Following this transaction, First Allied, The Legend Group and their subsidiaries will continue to operate autonomously under their current management structure and respective brands as part of the RCAP Holdings’ family of companies.
This transaction with RCAP Holdings will provide significant financial resources to First Allied to make substantial investments in technology, add professionals and support personnel, expand its 401(k) and 403(b) platforms, and enhance advisor marketing and lead generation programs. First Allied’s core value proposition centers around driving advisor efficiency and productivity, which has resulted in the company being a perennial leader in average advisor production. This transaction also fulfills the longstanding aspiration of RCAP Holdings and its family of companies, currently with over $10 billion in assets under management, to expand its presence in the independent financial advisor segment of the financial services industry.
Nicholas S. Schorsch, CEO and Chairman of RCAP Holdings, commented, “In 2007, my partners and I perceived an opportunity to build an open architected, wholesale broker/dealer to distribute best-of-class investment solutions. Looking back on our first investment in the alternative investment sector, our timing could not have been more prescient. The industry had been, and is still, heavily scrutinized by regulators, investors and even certain sponsors – largely for the right reasons in my opinion. But we discovered continuous, thoughtful shareholder-aligned improvements could go a long way. We insisted that every investment product distributed by our wholesale broker/dealer, Realty Capital Securities, LLC, closely adhere to our best practices, namely: pay for performance, plain language reporting and full transparency, alignment of interests between investors and management, lower fees, routine valuations and regular liquidity events.”
Mr. Schorsch continued, “Today, RCAP Holdings takes another step forward. We believe that the challenges and opportunities we witnessed in the wholesale distribution channel exist in the broader retail network as well, and we see value and opportunity for growth in a paradigm shift toward a sustainable direct relationship between the mass affluent investor and their independent financial advisor. The acquisition of First Allied gives RCAP Holdings a top-notch management team, in our view, one of the premier independent teams in the industry. Our value-add to First Allied is in being the best financial partner we can be, while providing strategic insights and direction where we can be helpful.”
Adam Antoniades, CEO and President of First Allied, commented, “Our affiliated advisors will benefit from immediate access to a well-capitalized platform tailored to provide the mass affluent, emerging high-net-worth, and retirement-focused investors with the next generation of industry-leading investment solutions focused on durable income and principal preservation. Collectively, these investment solutions represent a significant competitive advantage in an increasingly crowded market of financial advice. RCAP Holdings’ significant financial support also provides us the ability to accelerate implementation of key initiatives. Both First Allied and Legend advisors can expect RCAP Holdings and its management to further support their trusted relationships with their clients by maintaining an unwavering commitment to providing unbiased, objective advice through our client-focused model. This emphasis on advisor independence and the latitude to deliver best-in-class non-proprietary solutions for clients colors every aspect of this new relationship. RCAP Holdings is fully supportive of both First Allied’s and Legend’s independent broker/dealer systems.”
Michael Weil, member of RCAP Holdings and CEO of Realty Capital Securities, LLC, commented, “The association of First Allied with RCAP Holdings and its family of companies allows us to broaden our portfolio of financial companies in order to provide a fully integrated investment solution to the retail investor, not only indirectly through our wholesale broker/dealer, but to directly reach the individual investor through First Allied’s extensive network of independent financial advisors. RCAP Holdings’ financial strength and its management’s proven track record as a distributor of investment solutions emphasizing durable income together with capital preservation, paired with First Allied’s highly experienced management team will allow First Allied to grow and innovate.”
As part of the transaction, Lovell Minnick Partners, a leading private equity firm focused on the financial services industry, will sell its majority interest in First Allied and retain a minority interest in the combined company. Robert Belke, Managing Director of Lovell Minnick Partners, commented, “This transaction reflects our belief that a profitable exit from an investment makes sense when it brings together companies with complementary competencies that can jointly redefine an industry. We have enjoyed a strong working relationship with the First Allied team over the years and we wish them great success in the next stage of their development. We believe the combined First Allied and RCAP Holdings businesses will be well-positioned to create substantial future value for all stakeholders and we are excited to have an ongoing economic interest in the future success of the combined company.”
Reflecting their confidence in the transaction, First Allied’s senior management and other employee shareholders have provided a $10 million going-forward equity commitment to RCAP Holdings and its family of companies.
About RCAP Holdings
Based in New York, RCAP Holdings, LLC focuses on the retail direct investment industry and owns a direct majority economic interest in Realty Capital Securities, LLC, a FINRA registered wholesale broker/dealer and an investment banking and capital markets business, American National Stock Transfer, LLC, an SEC registered transfer agent, and RCS Advisory Services, LLC, a transaction management services business.
About First Allied Holdings
Headquartered in San Diego, First Allied Holdings Inc. operates an independent retail broker/dealer that serves as the firm of choice for independent financial advisors seeking to grow their businesses. First Allied’s exclusive business development platform has been expertly constructed to provide entrepreneurial advisors with the industry’s most comprehensive platform for growth. Dedicated to providing independent financial advisors with a competitive edge, First Allied empowers advisors to successfully compete and win the battle for high-net-worth and ultra-affluent clients. First Allied’s subsidiary companies provide brokerage, investment advisory, asset management, insurance, retirement plan design, technology, training, and support services to financial advisors nationwide. First Allied’s subsidiaries include The Legend Group, a specialized provider of investment and retirement solutions to the not-for-profit space, including 403(b) accounts. For more information about First Allied visit www.firstallied.com.
About The Legend Group®
The Legend Group is a unique investment services provider offering quality investment solutions for our clients for nearly 50 years. We provide a wide variety of products to our clients with premier personalized service and attention. The Legend Group of companies provide investment solutions for retirement, education savings plans, insurance needs, income generation and professional portfolio management. The corporate headquarters is located in Palm Beach Gardens, Florida, with additional offices around the country. For more information about The Legend Group, please visit www.legendgroup.com.
About Lovell Minnick Partners
Lovell Minnick Partners LLC is an independent private equity firm providing buyout and growth capital to companies in the financial services industry. From offices in the Los Angeles and Philadelphia areas, Lovell Minnick manages private equity partnerships with committed capital totaling over $850 million. Portfolio companies of Lovell Minnick operate in various areas of the global financial services industry, including asset management, banking, specialty finance, financial product distribution, securities brokerage, financial consulting services, and specialized outsourcing solutions. For more information regarding Lovell Minnick Partners visit www.LovellMinnick.com.