Blucora has entered into an agreement to acquire privately-held HK Financial Services (HKFS), a CPA-focused, registered investment advisor.
The combination adds approximately $4.4 billion to Blucora’s total client assets, bringing the total to more than $72 billion, with approximately 42% in advisory assets.
“This transaction further reinforces Blucora’s strategy of delivering tax-advantaged wealth management solutions to advisors and end-clients while maintaining healthy margins and profitable growth,” said John Clendening, president and chief executive officer of Blucora.
“We look forward to joining with HK Financial Services to provide more CPA firms, advisors and end-clients with additional capabilities and choice, while providing our Avantax advisors new opportunities for growth, broader solution sets, efficiency and profitability.”
The acquisition is being structured as a stock purchase with a price of $160 million, representing an attractive multiple of approximately 9.3x fully realized synergies on pro-forma 2020 EBITDA of HKFS.
As part of the transaction Blucora expects to issue $165 million of add-on term loan fungible with existing debt. JPMorgan is serving as administrative agent for the term loan. KeyBank, Credit Suisse and SunTrust are members of the lender group.
Haynes and Boone is representing Blucora in the transaction.