Advisor Intelligence

Schorsh Scoops Up Summit for $49M

In a surprise move Monday, Nick Schorsch’s subsidiary scooped up Florida-based Summit Financial Group for $49 million, continuing an acquisition hot streak that includes First Allied and Investors Capital Holdings.

Under the deal, RCAP-owned RCS Capital Corporation will operate Summit as a new stand-alone line of business, the firm says. Summit, which currently has over 300 advisors in 230 offices within the U.S., has over $7.5 billion in assets under management. With the acquisition of Summit, Schorsch's entities oversee about 2,300 advisors now. 

“We believe that RCAP's commitment to maintain the separate identity and culture of its broker-dealers, while at the same time allowing them to leverage the resources of what we believe to be one of the industry's fastest growing and most innovative firms, will result in the realization of our shared vision of providing even greater opportunities for Summit advisors,” says Summit’s president and CEO Marshall T. Leeds.

The announcement caught many in the industry off guard, says Jon Henschen, president of recruiting firm Henschen & Associates. “I hadn’t heard anything, this came from left field.” In fact, Henschen says he was expecting the next Schorsch purchase to be NEXT Financial.

Henschen says part of that surprise was Summit’s traditional lack of experience in the alternatives arena. Unlike Schorsch’s earlier acquisition of First Allied, which did a lot in the REIT space, Summit’s advisors generally sell insurance products—including variable and fixed annuities and life insurance. Summit also provides, through its SEC-registered investment advisor subsidiary, asset management and investment advisory services.

But there’s a good culture at Summit, Henschen says, one of many factors that makes the firm an attractive buy. In recent years, Leeds has worked to transform the firm, weeding out advisors with compliance issues and adding Pershing as an additional clearing firm next to its traditional partner First Clearing.

Expected to close in the first quarter of 2014, the transaction must first gain approval of Summit’s stockholders, as well as regulators. But Henschen says he doesn’t expect pushback from shareholders, a percentage of whom are advisors with an equity stake in the firm. “It’s a money-making event for reps with equity,” he says.

Henschen says Schorsch’s separate-entity model is appealing to advisors. “[RCAP} seems committed to being hands-off and not merging together,” Henschen says. “But only time will tell how this shakes out.”

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