HD Vest parent Blucora to acquire 1st Global for $180M

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Blucora, the parent company of HD Vest Financial Services, said Tuesday it is acquiring 1st Global, a tax-focused wealth management company that, like Vest, often partners with CPA firms, for $180 million in stock.

1st Global, based in Dallas, works with around 850 independent advisors who manage approximately $18 billion in total client assets and $9 billion in for-fee advisory assets. It works with about 350 CPA firms worldwide. After the acquisition, Irving, Texas-based Blucora will have nearly 4,500 advisors managing approximately $60 billion in total client assets.

The transaction is structured as a stock purchase for $180 million and is expected to close in the second quarter of the year, subject to regulatory approval and closing conditions. Blucora plans to fund the transaction with cash on hand and a $125 million add-on to an existing credit facility that comes due in 2024. It estimates the transaction will generate between $23 and $24 million of run-rate adjusted EBITDA by the end of the year.

1st Global is currently the second-largest tax-focused independent broker-dealer based on total revenue, specializing in servicing large, multi-partner accounting firms, right behind HD Vest, the No. 1 tax-focused independent broker-dealer, which mainly focuses on converting individual tax preparers into wealth advisors.

“This transaction is in line with our strategy to accelerate growth and deliver enhanced results to shareholders,” said Blucora president and CEO John Clendening in a statement. “Clients are underserved unless their financial advisor has the capability to advise specifically on the tax implications of investment decisions. We now have the opportunity to leverage each businesses’ unique capabilities and technologies to help advisors deepen their relationships with clients while expanding our footprint in the marketplace to drive scale and growth.”

Blucora plans to combine HD Vest’s individual tax advisor focus with 1st Global’s institutional, multi-partner focus. “Given Blucora’s strong business model and demonstrated execution, and the similarities between the businesses, we believe Blucora is the ideal acquirer for us,” stated 1st Global chairman and CEO Tony Batman. “We know that Blucora shares our vision and that together we are better and stronger with the shared talent and expertise of the two businesses. This will provide our advisors and their clients with even greater service, support and solutions for years to come.”

Formerly known as InfoSpace, Blucora acquired HD Vest in 2015 for $580 million (see Blucora to buy HD Vest for $580 million). It planned to leverage its investment in the tax prep software provider TaxAct, which Blucora bought for nearly $288 million in 2012. That same year, the company changed its name from InfoSpace to Blucora. InfoSpace used to be a major search engine and internet portal during the early dot-com era, but Blucora later sold InfoSpace for $45 million in 2016 to the email marketing provider OpenMail and exited the search engine market.

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M&A Wealth management Financial planning Tax planning Avantax Wealth Management 1st Global Blucora TaxAct