Cetera acquires Avantax for $1.2B

Cetera Holdings, a financial planning firm, acquired Avantax, a tax-focused financial planning and wealth management company that partners with accounting firms, on Monday for $26 per share in a deal valued at approximately $1.2 billion.

Under the deal, Dallas-based Avantax will become a standalone business unit of San Diego-based Cetera, adding 3,078 Avantax financial professionals, with $83.8 billion in assets under administration and $42.6 billion in assets under management, as of June 30, 2023. Cetera will hold onto Avantax's legal entities, core technology, product offerings, and existing clearing and custody relationships.

Avantax was formerly known as Blucora, which rebranded as Avantax last November after Blucora sold off its TaxAct tax preparation software to a private equity firm last year to focus instead on its Avantax financial planning and wealth management business (see story). Blucora created Avantax Wealth Management in 2019 after acquiring HD Vest and 1st Global, two financial planning firms that partnered with CPA firms around the country to offer wealth management services, and combining them under the Avantax name (see story).

Now they will become part of the larger Cetera Financial Group, which has over 9,000 financial professionals and their teams and oversees approximately $341 billion in assets under administration and $121 billion in assets under management, as of June 30, 2023. 

"This transaction, upon closing, will deliver immediate cash value to Avantax stockholders," said Avantax CEO Chris Walters in a statement. "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."

The purchase price of $26 in cash per share represents a premium of approximately 30% to the closing price on Sept. 8. The deal is expected to close by the end of the year. After it closes, Avantax will become a privately held company, and its shares will no longer trade on Nasdaq.

"As we explored expanding Cetera's capabilities into wealth management and tax expertise as a core component of our growth strategy, it quickly became clear that Avantax was an ideal target and a powerful fit for our business," said Cetera Holdings CEO Mike Durbin in a statement. "As we enter Cetera's next phase of evolution, our five-year growth strategy is off to a terrific start. Avantax will significantly build out Cetera's capabilities in tax and wealth management."

A team from the law firm Haynes and Boone represented Avantax on the deal.