While independent broker-dealers (IBDs) are a hot commodity in today’s M&A market, Osaic’s private equity backer, Reverence Capital Partners, is holding on tight.

That’s according to Osaic chief executive Jamie Price, who said Reverence, now six years into its holding period for the Phoenix-based brokerage firm, has no plans to exit any time soon.

In the RIA space and beyond, private equity funds generally hold their portfolio investments for five to seven years before beginning to seek out a sale or other liquidity event. Price said limited partners have invested in Osaic through a 10-year fund that Reverence opened in 2019, when it acquired a 75% stake in the company from previous PE backers Lightyear Capital and PSP Investments in a deal that valued the broker-dealer at $2.3bn. There are four years remaining until Reverence would have to liquidate or extend the fund.

‘I think if they could own us longer than the 10-year period, they would,’ Price said. ‘And there are ways for them to structure the ability to own [Osaic] longer.’

Citywire sat down with Price, Osaic’s CEO since 2016, as well as president of advice and wealth management Greg Cornick and executive vice president of advisor growth and platform solutions Dimple Shah at Osaic’s headquarters office in Phoenix, Ariz. last week. The firm oversees roughly$705bn in client assets and rebranded in June 2023 from its previous name, Advisor Group.

The interview took place days before rival brokerage giant LPL Financial shook up the IBD landscape by announcing its $2.7bn acquisition
of $285bn Commonwealth Financial Network.

Price’s comments about Osaic’s relationship with Reverence are notable given recent reports and speculation around the possibility that the PE shop may be evaluating its options with the brokerage firm. In December 2023, sources reportedly told Bloomberg News that Reverence was looking to take some chips off the table by selling a 20% stake in Osaic. A deal never materialized.

Price dispelled the idea, acknowledging that while a liquidity event for Osaic is ultimately inevitable, he doesn’t see the firm ‘doing anything from a liquidity standpoint in the near term.’

He added Reverence has never asked Osaic for a dividend or other form of recapitalization.

Integration double time

Osaic’s last two years have been defined by two monumental integration efforts.

For one, the company in January completed a firmwide restructuring effort in which it consolidated eight of its formerly disparate broker-dealer subsidiaries into a single entity. That campaign, which Osaic refers to as its ‘Journey to One,’ coincided with the company’s 2023rebrand.

The other is the firm’s landmark acquisition of Lincoln Financial’s $115bn wealth management division, Lincoln Wealth, through which Osaic added roughly 1,400 advisors. Cornick said the deal is ‘going really well,’ and Osaic is particularly excited about Lincoln’s planning-first approach and depth with high-net-worth clients.

The official conversion date for Lincoln’s client accounts to transition onto Osaic’s platform was January 29, although Price said the actual conversion process will take a total of three to four months to complete.

With those projects in their final stages, Price said Osaic is now positioned to capitalize on what he sees as a major strategic opportunity: leveraging ‘the full community of our advisors.’

Price said Osaic has an ‘intimate’ relationship with its advisor base and wants to help them ‘be better entrepreneurs and grow enterprise value, [while] at the same time helping them do the things they want to do with their customers.’

‘We got significantly repowered by doing the Journey to One, which uncomplicated our ability to leverage our company further,’ he said.

M&A machinations

While Osaic has made some big splashes in the M&A arena, Price said the company never explicitly puts acquisitions in its five-year business plan.
Of course, given the company’s size, ‘if there is a deal out there that somebody is looking to do, we will get invited to the table, no doubt,’ he conceded.

Three years ago, Price said Osaic would have been ‘out there more aggressively,’ pursuing M&A as it looked to build scale and bring economic advantages to advisors. However, it’s approach to deal making has since changed.

‘We are not in a position today where we have to do acquisitions to actually generate scaled business economics,’ Price said — another benefit of the firm’s consolidation play.

Price also acknowledged Osaic made layoffs following the Lincoln deal. Although an exact number of job reductions was not disclosed, Price said the firm’s most recent bout of layoffs consisted of about 52% Osaic employees and 48% Lincoln employees. The almost-even split wasn’t necessarily planned, he added.

‘Every time we have done an acquisition, there are people synergies. It’s the unfortunate part of M&A, but we don’t need two heads of marketing, i.e. two heads of the field. Every time we do a large acquisition, you are looking at roles and responsibilities and picking the best athlete,’ Price said.

Shah added that Osaic is currently hiring for support roles, looking for people to man phone lines and help with ‘day-to-day execution to support the business.’

Going forward, Shah said Osaic is working to ‘set itself apart in the independent space around advisor growth and productivity,’ particularly by supporting advisors through flexibility, curated solutions and communities. The vision, she explained, is to boost Osaic’s profile as a home where advisors can connect with other advisors and achieve their aspirations for their practices — and their clients.

‘We have the vision and the strategy laid out. I think it’s fulfilling that and creating more recognition that this is what Osaic is known for,’ she said.

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