Avantax parent Blucora wins proxy fight, reportedly receives new offer

A rare activist-investor campaign to overhaul a midsize wealth manager ended in a resounding defeat in a shareholder election held at the firm’s annual meeting.

Shareholders of Avantax Wealth Management parent firm Blucora re-elected all 10 of the Dallas-based firm’s directors “by a wide margin” on April 21, according to preliminary results released by the company. Asset manager Ancora Holdings and its CEO, Fred DiSanto, had mounted a bid to seat him and three other new board members in a months-long campaign that saw near-daily criticisms of Blucora’s management, which were in turn met by rebuttals from the company.

While Ancora didn’t successfully take over the parent of the tax-focused, 3,800-advisor wealth manager, a potential bidder has reportedly approached Blucora with its own proposal: Private equity firm Golden Gate Capital reached out with an offer the week before the shareholder meeting, Bloomberg News reported, citing anonymous sources familiar with the matter.

Career moves

What you missed in wealth management: April 19 to 23

April 22, 2021 11:37 PM

Regardless, Blucora executives celebrated the election of the incumbent directors. The board and management team thanked the “stockholders for their engagement, feedback and attention to the annual meeting election,” according to a statement released by the firm after the vote.

“We have learned from our dialogue with our stockholders and appreciate the continued support,” Blucora’s statement reads. “We know we have substantially more work to do, but we appreciate the recognition from our stockholders that Blucora is a profoundly different and stronger company than it was just a year ago.”

DiSanto and Ancora described the results of the election differently.

“Although we are disappointed with the outcome of this contest, we are committed to remaining an engaged stockholder of Blucora,” according to Ancora’s statement. “We urge the board of directors to reflect on the pressing issues at hand and objectively assess all paths to unlocking value. In light of the strategic interest in the company, as recently reported by Bloomberg News, we expect the board of directors to thoroughly evaluate any bonafide offers for the company (in whole or its parts).”

Representatives for Blucora didn’t respond to requests for comment on the report of the possible takeover bid, while representatives for Golden Gate declined to comment.

A deal to take Blucora private after its losses of $342.8 million in 2020 stemming from a massive impairment charge would be anything but surprising. Private equity firms have fueled record volumes of M&A deals in wealth management for more than the past five years. Advisor Group took Ladenburg Thalmann private last year in a Reverence Capital Partners-backed deal.

Avantax has grown substantially since Blucora acquired the firm — then known as HD Vest —for $580 million in 2015, but much of Ancora’s criticism revolved around missing links between the wealth management business and Blucora’s TaxAct software. Avantax recruited more than 200 new registered representatives in 2020. However, its headcount slipped on a net annual basis by 214 reps to 3,770 year-over-year.

With $508 million in annual revenue, Avantax is the No. 16 firm on Financial Planning’s IBD Elite rankings of the largest independent broker-dealers.