Recapitalization? SPACs? Cetera’s PE backer shares long-term plans
October 15, 2020
By Tobias Salinger, Financial Planning
Excerpt:
Cetera is “a flywheel; It just keeps getting better and better,” Tony Salewski, a Genstar managing partner and Cetera board member, said at a virtual event for advisors this week. “It’s a business that we want to hold for a very long time.”
Salewski noted that his PE firm’s investments typically carry a five- to 10-year timeline. He also mentioned last year’s Mercer Advisors recapitalization deal between Genstar, Lovell Minnick Partners and Oak Hill Capital. Genstar sold Mercer “to ourselves in a new fund” in order to extend “from that initial five years to re-underwriting another 10 years,” Salewski said.
The message comes as the Los Angeles-based independent broker-dealer network and other large wealth managers face reduced business under the low interest rates triggered by the economic toll of the coronavirus. Despite credit agency warnings about high levels of debt and reports of home office layoffs, Cetera aims to grow through corporate realignment and recruiting with higher offers for incoming advisors.
While IBD recruiter Jon Henschen says the firm’s forgivable note offers based on advisory assets are “above industry average by quite a bit,” he says he has stopped placing advisors with Cetera due to declines in home-office service levels and the firm’s high debt leverage. Advisors changing firms tell Henshen they “don’t want to have to do this again,” he says.“If you go through a leveraged buyout scenario, it doesn’t really emanate stability,” Henschen says. “They’re all about financial engineering and cutting expenses. … For them, long term is five years.”
