LPLA to Buy Commonwealth Financial, Boost Wealth Management Offerings

LPL Financial Holdings Inc. LPLA entered into a definitive merger agreement to acquire Commonwealth Financial Network. The all-cash transaction is valued at roughly $2.7 billion.

Despite this, LPLA shares fell 2.9% in Monday’s trading session.

Details of the LPLA-Commonwealth Financial Deal

Per the agreement, LPL Financial will acquire 100% shares of Commonwealth Financial. The deal is anticipated to be completed in the second half of 2025, subject to requisite regulatory approvals and other customary closing conditions. The company intends to complete the integration in mid-2026.

Waltham, MA-based Commonwealth Financial, founded in 1979, is the largest independently owned wealth management firm in the United States. It offers integrated business solutions and services for roughly 2,900 financial advisors. As of Dec. 31, 2024, it had roughly $285 billion in assets under management (AUM) and client cash sweep balances of about $6 billion.

Upon the deal's completion, Wayne Bloom, CEO of Commonwealth Financial, will join LPL Financial’s management committee and will continue to lead the Commonwealth community and their advisor experience. Further, he will collaborate with LPLA’s leadership team to launch LPLA’s office of Advisor Advocacy.

LPL Financial expects to finance this acquisition using a combination of corporate cash, debt and equity. In sync with this, the company announced a public offering of nearly 4.7 million shares at $320 per share, which is set to be closed on Apr 2, 2025. The primary purpose of this offering is to fund the acquisition of Commonwealth Financial. Any leftovers will be used for general corporate purposes. Also, LPLA intends to pause share buybacks to maintain a solid and flexible capital position.

LPL Financial’s Rationale Behind the Acquisition

This transaction is likely to expand LPLA’s advisor base and enhance advisory experience alongside AUM, strengthening its position as a leader in the independent advisory space.

Rich Steinmeier, CEO of LPL Financial, stated, “Commonwealth’s service philosophy enhances the value we’ll collectively bring to all Advisors across the LPL network. In addition, LPL’s advanced technology, intuitive business solutions and breadth of wealth management offerings unlock boundless potential for Commonwealth Advisors and the clients they serve.”

LPLA will likely incur roughly $485 million of one-time estimated onboarding and integration expenses, out of which nearly $155 million will be incurred for technology expenses.

The deal is anticipated to be accretive to LPLA’s 2026 adjusted earnings per share in the low single-digit range. Further, the company projects earnings before interest, tax and depreciation & amortization (EBITDA) accretion of approximately $415 million upon the completion of integration.

Also, LPL Financial aims to maintain pro forma net leverage within management’s target range of 1.5x to 2.5x.

This move aligns with the company’s inorganic growth strategy. In March 2025, the company acquired The Investment Center Inc., while it took over Atria Wealth Solutions in October 2024. These buyouts reflect its emphasis on LPLA’s efforts to expand its advisor base and wealth management services and capitalize on revenue and cost benefits.

LPLA’s Zacks Rank & Price Performance

Shares of LPL Financial have risen 41.6% compared with the industry’s growth of 14.7% in the past six months. 

Currently, LPLA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Steps by Other Finance Firms

Last month, BlackRock Inc. BLK acquired Preqin, a premier independent provider of private markets data, solidifying its private markets capabilities to cater to rising demand among clients.

With Preqin, BLK aims to address transparency concerns, positioning its private markets platform to deliver investments, technology, and data holistically to power next-generation investment solutions for clients. The acquisition significantly enhances the company’s investment technology capabilities, marking a strategic expansion into the rapidly growing private markets data segment.

In February, Old Second National Bancorp, Inc. OSBC agreed to acquire Bancorp Financial, Inc. (“Bancorp Financial”) and its wholly-owned subsidiary, Evergreen Bank Group (“Evergreen Bank”). The transaction is valued at roughly $197 million. The consideration will be paid in 75% stock and 25% cash.

OSBC will likely benefit from expected cost savings of 30% of Evergreen’s 2025 non-interest expense, 50% of which will be phased in 2025 and the rest realized thereafter. Also, roughly $17.6 million of one-time pre-tax merger expenses will be incurred.

The deal is anticipated to be roughly 16% accretive to OSBC’s 2026 earnings per share, assuming the execution of cost savings. Further, the company projects a common equity tier 1 capital of 11.7% at closing and a 20% internal rate of return.

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This article originally published on Zacks Investment Research (zacks.com).

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