LPL Financial has announced an agreement to acquire Commonwealth Financial Network for about $2.7 billion in cash, linking up the country’s largest independent broker/dealer with one known for its small cultural feel.
The deal marks a turning point for the broker/dealer space as Commonwealth, a partner-owned firm that for years had championed its culture as a boutique, advisor-focused firm, a place where home office executives are reachable by direct phone calls and service team members are deeply familiar with the firms and advisors they support.
The agreement sets the stage for San Diego-based LPL to bring over Commonwealth’s 2,900 independent advisors and $285 billion in client assets, bolstering its advisor count to 29,000 across $1.7 trillion in assets. The transaction is set to close in the second half of 2025, with conversion to the LPL platform to be completed in 2026.
LPL is set to acquire 100% of privately-held Commonwealth’s equity for a purchase price of about $2.7 billion in cash. LPL will finance the deal with a combination of corporate cash, debt and equity, which will result in leverage of 2.25x following the close of the transaction, with a “near-term” path to reduce that leverage to a range of 1.5x to 2.5x.
The firm estimates that onboarding and integrating clients and assets will cost $485 million. Meanwhile, it anticipates an EBITDA benefit of $415 million when “fully ramped,” a more than 20% boost to LPL’s current EBITDA of $2.1 billion, according to an investor presentation.
According to an SEC filing Monday, LPL noted it was offering $1.5 billion in shares of common stock to help fund the transaction, giving underwriters a 30-day option to purchase up to $225 million shares at the public price, less an underwriting discount.
LPL’s challenge will be convincing many of Commonwealth’s advisors to bring their businesses and clients to the larger firm or risk having many decamp for other companies.
LPL estimates a 90% headcount retention rate and noted that Commonwealth has had a 98% retention rate over the past five years through 2024. LPL CEO Rich Steinmeier said on an investor call that the firm expects to keep advisors and their clients partly because it is “not changing the Commonwealth brand” and combining the two firm’s technology platforms.
“We want to bend LPL to look more like Commonwealth, not the other way around,” he said, speaking from Waltham, Mass., alongside Commonwealth CEO Wayne Bloom.
Commonwealth was founded by Joe Deitch in 1979, who gave up the CEO role to Bloom in 2009 but remains chairman. Deitch owns the company and has about a dozen other leadership team members, according to its Form ADV. The partnership includes Joe’s son, Matthew Deitch, vice chairman of corporate strategy.
Through the conversion, Deitch will assume an advisory role to LPL’s board of directors, and Bloom will join LPL’s management committee, reporting to LPL CEO Steinmeier. Steinmeier added on the call that Bloom will set up a new division for best practices and service excellence for advisors.
Commonwealth, which will retain its brand, has long touted itself as one of the last remaining privately held IBDs, often recruiting advisors away from firms that were not.
Last year, it received the top spot for satisfaction among independent advisors in a J.D. Power ranking. Commonwealth is dually headquartered in San Diego and Waltham, Mass., and also has an operations hub in Blue Ash, Ohio.
Unlike other platforms, few advisors who work with Commonwealth leave. How many Commonwealth advisors will extend their commitment to LPL remains to be seen.
“After the initial shock and awe of the rumored transaction, it forces me as an advisor and business owner to evaluate all options on the table to determine which is in the best interest of my clients,” said Vance Barse, founder of Your Dedicated Fiduciary, who has been affiliated with Commonwealth for 10 years. “I have to account for not only firm culture but also the back office experience when it comes to the servicing of our cherished clients.”
Barse is concerned that, given LPL’s size, the back-office and service center experience could be very different.
“When we reach out to the current service center, nine times out of 10, I know the person who has been randomly assigned that call; we catch up for a bit,” he said. “It’s a meaningful personal relationship. My concern with any large firm acquiring Commonwealth is that the relationships that we have enjoyed might come to pass.”
LPL has been actively recruiting advisors to build up regional offices. The deal for Commonwealth will do that in one large sweep, barring attrition of those who don’t decide to make the move.
The IBD has been aggressively scooping up other b/ds for the last several years. LPL recently closed on acquiring The Investment Center, a New Jersey-based firm with about $9 billion in brokerage and advisory assets and 240 advisors. Last fall, it acquired Atria Wealth Solutions, with about $100 billion in assets among 2,400 advisors and 150 banks and credit unions. In 2020, it added the brokerage business of Waddell & Reed.
According to a March SEC filing, LPL noted the potential sale of $4 billion in stock or debt.
Steinmeier was LPL’s chief growth officer who took over after the IBD terminated President and CEO Dan Arnold for violating the company’s respectful workplace policies. Steinmeier was also elected to the board.
Commonwealth CEO Bloom said his firm had been in discussions with a number of “credible suitors” as guided by Goldman Sachs advisors. He said LPL’s promise to maintain Commonwealth as an “intact community” was important in the decision. Later on the call, he mentioned LPL’s CFO solutions, virtual services for advisors to outsource work and its alternative offerings.
“I’ve been here for 36 years and have competed with LPL the entire time,” Bloom said. “And here I am, completely excited for our advisors, their clients and the Commonwealth team.”
Citywire.com reported in January that Commonwealth was pursuing a sale of a minority stake; the publication reported last week that the IBD was in talks to sell to LPL.
LPL’s stock, which is listed on the NASDAQ, ended up 1.11% on Friday to $336.89. In early-market trading on Monday, it was down 4.04% to $323.21.
