Cetera to acquire Avantax in billion-dollar deal

The parent of Cetera Financial Group secured an agreement to acquire tax-focused wealth management firm Avantax in an all-cash deal valuing the company at $1.2 billion.

Los Angeles-based Cetera Holdings unveiled the agreement to acquire Dallas-based Avantax, which has 3,078 financial advisors, $83.8 billion in assets under administration and $42.6 billion in assets under management, on Sept. 11. In its second major acquisition of the year after purchasing the retail wealth management business of Securian Financial Group, Genstar Capital-backed Cetera will pay $26 per share in a transaction expected to close by the end of the year. Avantax's board unanimously approved the deal, which will take the company private.

"It is a result of Avantax's strategic transformation and value creation efforts, which, when combined with the sale of TaxAct in December 2022, has unlocked significant value for our stockholders," Avantax CEO Chris Walters said in a statement. "I am extremely grateful to our extraordinary community of financial professionals as well as the entire Avantax team for their unwavering focus and steadfast professionalism throughout our transformation. I am confident that this combination with Cetera is beneficial for Avantax, our financial professionals, employees and stockholders."

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After the spinoff of the tax preparation software business last year for $720 million, Avantax has been focused solely on wealth management. The deal marks the second of the year in the industry taking a wealth management firm off the public markets after private equity firm Clayton, Dubilier & Rice acquired Focus Financial Partners last month. Of the 9,000 advisors using Cetera's brokerages, about 1,100 work with its tax-focused Cetera Financial Specialists.

"This acquisition will establish a strategic relationship between Cetera and Fidelity, which will enable Cetera to expand further into a multi-custodial platform, enhancing Cetera's capabilities to provide tools and functionalities for its affiliated advisors," Cetera Financial CEO Adam Antoniades said in a statement. "We will take a thoughtful, personalized, and proactive approach with Avantax to ensure Avantax's valued financial professionals aren't disrupted in any way. Our tax-centric Cetera Financial Specialist team has already created a formidable presence in our industry, and we are delighted that after the closing of this acquisition, we will be able to offer all of our advisors even greater opportunities to expand into tax and accounting." 

Avantax will remain "a standalone business unit" within Cetera after the deal, which is priced at a 30% premium of its closing value in the last day of stock trading, the firms said in a press release.

"Over the past several years, Avantax's board and senior management team have positioned the Company for long-term, sustainable growth through a simplified strategy, strengthened balance sheet and improved operational performance while exploring strategic opportunities for the future success of the business," Avantax Chair Georganne Proctor said in a statement. "After carefully evaluating how best to maximize value for our stockholders, the Board unanimously determined that this transaction is in the best interests of Avantax and its stockholders. We also believe that this will position the business, our people, our financial professionals and our affiliates for the future."