LPL Financial (LPLA) Announces Deal to Buy Allen & Company

LPL Financial Holdings Inc. LPLA has agreed to acquire Lakeland, FL-based Allen & Company. With nearly 30 advisors and serving approximately $3 billion of client assets, Allen & Company is a broker/dealer and registered investment adviser (RIA).

Notably, the definitive agreement was signed on May 17. Closing of the deal is expected by the end of this year, subject to receipt of regulatory approval and other customary closing conditions.

Per the terms of the agreement, Allen & Company’s advisors and staff will be onboard LPL Financial as its employees. Moreover, Allen & Company’s client assets will be onboard LPL Financial’s custodial platform. Also, LPL Financial will maintain Allen & Company’s operations and brand.

While the financial terms of the agreement have not been disclosed, the deal provides for an initial purchase price and a potential contingent payment above a specified threshold. The payment will be based on the portion of Allen & Company’s client assets that are onboard LPL Financial’s platform. Per the company, this will likely come to seven times the “post-synergy” EBITDA.

Dan Arnold, LPL Financial’s president and CEO, stated, “We are focused on M&A opportunities that align with us strategically, operationally and financially, and Allen & Company is a great fit on all fronts. The firm is made up of great advisors with values similar to ours who are focused on making a positive difference in the lives of their clients, employees and the communities they serve.”

Allen & Company’s chairman, Ralph Allen said, “We are fortunate to have been able to support thousands of clients over the past eight decades, and we are ready to take our business to the next level. Partnering with LPL provides us enhanced investment and technology platforms so that we can continue to focus on serving our clients and their families.”

Shares of LPL Financial have gained 38.2% over the past six months against 2.1% decline of the industry it belongs to.

Currently, the company sports a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Some other top-ranked stocks from the finance space are Cohen & Steers, Inc. CNS, BlackRock, Inc. BLK and Franklin Resources, Inc. BEN. All these stocks currently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, Cohen & Steers witnessed an upward earnings estimate revision of 6.9% for 2019. Its share price has risen 40.1% over the past six months.

The Zacks Consensus Estimate for BlackRock’s current-year earnings has been revised 5.7% upward over the past 60 days. Its share price has increased 8.6% over the past six months.

Franklin Resources has witnessed an upward earnings estimate revision of 8.9% for fiscal 2019 over the past 60 days. Its share price has improved 3.5% over the past six months.

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