IBD sold to Cambridge, converted into one of its largest offices
Cambridge Investment Research added 82 financial advisors after closing its acquisition of shuttering Broker Dealer Financial Services — just over a year after the two sides started discussing the deal.
The No. 7 independent broker-dealer and BDFS completed the deal on Oct. 20. Cambridge retained a little more than 65% of the selling firm’s 125 advisors, according to senior vice president for marketing Jeff Vivacqua and Jordan Creek Financial Solutions Vice President Christina DeShaw.
DeShaw, the former CEO of BDFS, now leads its remaining advisors at West Des Moines, Iowa-based firm Jordan Creek atop one of Cambridge’s largest enterprises — the firm’s name for its super offices of supervisory jurisdiction — according to Vivacqua. The terms of the deal were not disclosed.
The advisors joining Cambridge are switching custodians from Wells Fargo’s First Clearing to Fidelity’s National Financial Services. The IBD didn’t offer retention bonuses to the incoming advisors, whom Vivacqua says were more concerned about the “value-add” of its services.
Wealth management firms closed on 43 M&A deals by the end of September, outpacing any other third quarter tracked by consulting firm Echelon Partners. IBDs are fueling this record activity, with Cambridge rivals Cetera Financial Group and Advisor Group making the biggest deals of 2018 in the sector.
“We’re not focused on acquisitions from a growth perspective for Cambridge,” says Vivacqua. “We don’t want to impact the culture that we’ve built so far over the years.”
Retired former CEO Mike Sherzan ran unsuccessfully for Congress in 2016, and he became chairman of the board prior to the deal.August 23
The No. 7 IBD has unveiled five new internal classifications for practices in an effort, it says, to boost the customization of its services for advisors.June 5
The failed 2016 Congressional run of former BDFS owner Mike Sherzan “never came up” in the firms’ discussions, Vivacqua adds. He and DeShaw cite a cultural fit between the two firms, which share headquarters in Iowa, advisors in the bank channel and a privately-held structure in common.
“It allowed us to keep our culture and keep our family of advisors together but also have the depth and breadth of Cambridge behind us for the future,” DeShaw says of the deal.
The buyer and seller began talks in September 2017, with negotiations stretching into this year before the two sides conducted due diligence for several months, according to Vivacqua. Cambridge’s offerings around practice management, succession planning, loan financing and technology sealed the deal.
DeShaw praised Cambridge’s virtual office assistant capabilities. The IBD also launched a FINRA-compliant texting service under a vendor named Hearsay Systems last month. The firm’s more than 3,200 advisors can now use the tech firm’s Relate app to send and receive messages with clients.
At the time the deal was made this summer, BDFS had about $17 million in production, according to Vivacqua. Cambridge generated $811.4 million in revenue last year, with $459.8 million or 57% from fees — the sixth-highest share from advisory services in the IBD space.
The parties had already started putting together a conversion plan for the BDFS advisors by the time the deal came to fruition. They also held a series of roadshows and home-office visits for the incoming advisors in subsequent months.
“I’m ready to go and excited, and I think it’s going to be a really fun first chapter to write because there’s so much opportunity,” DeShaw says.