Goldman Sachs is out with a deal for LPL Financial Services to back its leveraged buyout by Texas Pacific Group and Hellman & Friedman. The deal consists of a $900 million term loan "B," a $50 million special purpose term loan "A" and $400 million of privately placed mezzanine debt. Price talk has not yet been released. In October, the company announced plans to sell a majority equity interest to the two private equity groups.
Jeffrey Goldstein, managing director at Hellman & Friedman, said LPL is a franchise leader in a great industry and has a first class management team. "LPL is in a space with great industry tailwinds," he said. "There is a demand for unbiased independent financial advice from brokers, who are not selling proprietary products, and together with that, there is a great movement from brokers and from wire houses into the independent channel and further, a general increase for the market as a whole in investable assets."
Moody's Investors Service assigned a B2 rating to the bank facility and a Caa1 to the senior subordinated debt. Moody's writes that the leveraged buyout "introduces substantial financial leverage into the capital structure of LPL and reduces the firm's financial flexibility."
LPL was formed in 1989 through the merger of two smaller brokerage firms, Linsco, established in 1968, and Private Ledger, founded in 1973. According to its Web site, Financial Planning Magazine ranked LPL as the No. 1 independent broker dealer in the nation for 10 consecutive years. The company had $1.1 billion in revenue in 2004 with over 6,200 affiliated financial advisors and over 3,500 branches offices in the U.S. A spokeswoman for Texas Pacific did not comment.