Financial services company Ladenburg Thalmann Financial Services is to acquire KMS Financial Services, a Seattle-based independent broker-dealer and investment advisor.
Under the terms of the transaction, Ladenburg will pay approximately USD24 million, consisting of USD11 million of cash, USD8 million of four-year notes and 1,440,922 shares of Ladenburg common stock.
Founded in 1971, KMS has approximately 325 independent financial advisors with over USD14 billion in client assets and revenues of approximately USD84 million for the 12 months ended June 30, 2014. Upon completion of the transaction, Mark Hamby, KMS’s chairman and CEO, Eric Westberg, its president and chief operating officer, and the rest of the KMS management team will continue to operate KMS as a standalone business based in its current headquarters in Seattle, Washington.
With the KMS acquisition and Ladenburg’s recently-announced, pending acquisition of assets of Sunset Financial Services, Ladenburg’s network of independent brokerage and advisory firms will total approximately 3,500 financial advisors with USD110 billion in total client assets and Ladenburg will have annual revenues of approximately USD1 billion. The KMS transaction will give Ladenburg a significantly expanded presence in the Pacific Northwest.
“This transaction shows Ladenburg’s commitment to the proposition that the independent brokerage and advisory business is one of the most dynamic areas of the financial services industry,” says Dr Phillip Frost, Ladenburg’s chairman of the board and principal shareholder. “We value the unique culture of KMS and believe that they will be a natural fit for the businesses we are building at Ladenburg.”
“We have been impressed by Ladenburg’s record of acquiring independent brokerage and advisory firms with distinct cultures and helping them pool their collective strengths to capitalize on growth opportunities,” says Hamby. “Joining Ladenburg’s alliance of firms points to a dynamic future for the culture we’ve developed over KMS’s first 43 years.”
KMS advisors will have access to investment banking and capital markets resources, institutional quality equity research, a fixed-income trading desk, wealth management services through Ladenburg Thalmann Asset Management, specialised point-of-sale support for life insurance products through Highland Capital Brokerage, and advisor-friendly trust services through Premier Trust.
Ladenburg’s acquisition of KMS is expected to close later this year, and is subject to regulatory approval and other customary closing conditions.
