Private equity owners of IBDs will be tested during the downturn
April 3, 2020 By Bruce Kelly, Investment News How will they hold up as they deal with the fallout from COVID-19? Private equity investors have been major players in the independent broker-dealer industry since 2005, when two top-tier managers, Hellman & Friedman and Texas & Pacific Group, now TPG, bought 60% of LPL Financial. Five years later, they took the company public at $30 per share. The initial public offering was an unqualified success, with LPL shares flirting with $100 per share this year before the COVID-19 pandemic sparked a market sell-off. Other private equity managers obviously took notice, as they’ve been snatching up registered investment advisers for the past 0 years. Although broker-dealers are larger than RIAs when it comes to assets, B-Ds are less profitable, with margins in the single digits, compared with margins of 20% to 30% for...
