Deals & People May 20, 2024

Advisory M&A News – 5/20/24

Blue Ridge Associates acquires TSC 401K; Alerus Financial Corporation and HMN Financial announce strategic transaction; Bluespring Wealth Partners acquires KDI Wealth Management; and more.

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Blue Ridge Associates Acquires TSC 401K

Blue Ridge Associates, a provider of administration and compliance solutions for employer-sponsored ESOP and qualified retirement plan benefits, announced that it has acquired Tax Sheltered Compensation, Inc.

“After an exhaustive search process, in addition to checking all the boxes, the complimentary fit between ESOP and qualified retirement savings plans made Blue Ridge the obvious choice for TSC,” Matt Slyter, president of TSC, said in a statement.

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Established in 1966, TSC now serves 3,100 plans covering over 152,000 participants across the small and middle-market business community. The addition of TSC will expand Blue Ridge’s service offering and geographical coverage.

“Our strategy has long been to create complimentary, market leading, people first businesses that leverage technology to enable our clients to provide wealth building benefits to their employees with peace of mind,” Bill Yoerger, CEO of Blue Ridge, said in a statement. 

Alerus Financial Corporation and HMN Financial Announce Strategic Transaction

Alerus Financial Corporation and HMN Financial Inc. jointly announced the signing of a definitive agreement and plan of merger pursuant to which Alerus will acquire, in an all-stock merger, HMNF, a savings and loan holding company headquartered in Rochester, Minnesota, and the parent company of Home Federal Savings Bank.

Under the terms of the merger agreement, HMNF will merge with and into Alerus and Home Federal will merge with and into Alerus’ wholly-owned bank subsidiary, Alerus Financial, National Association, in a transaction valued at approximately $116.4 million.

The merger represents the twenty-sixth acquisition for Alerus since 2000 as part of its long-term plan to continually expand its business segments, including banking, wealth services and retirement and benefits plans and services.

Upon completion of the merger, the combined company will have approximately $5.5 billion in total assets, $3.7 billion in total loans and $4.3 billion in total deposits, assets under administration and management of approximately $43.1 billion, with 29 locations across the Midwest, as well as Arizona.

Bluespring Wealth Partners Acquires KDI Wealth Management

Bluespring Wealth Partners, a leading acquirer of both independent RIAs and hybrid wealth management firms, announced their acquisition of KDI Wealth Management, a wealth management firm based in Scottsdale, Arizona.

KDI personnel currently oversee more than $750 million in client assets. The firm is run by husband-and-wife duo Kevin Dick, CEO and wealth adviser, and Carrie Dick, president and wealth adviser, alongside longtime business partner Shane Keith, vice president and wealth adviser. The firm was founded in 2005 and consists of 14 total employees.

The KDI team offers a full suite of services, including wealth and retirement planning, estate planning, cash flow management, tax planning and more. Bluespring will offer KDI streamlined solutions to outsource non-revenue generating tasks.

“Bluespring’s dedication to fostering entrepreneurship deeply resonated with us,” KDI CEO Kevin Dick, said in a statement. “We’re excited to have a partner that respects our vision for the business. With Bluespring we will be able to elevate our capabilities, expand our reach, and continue to deliver exceptional value to our clients.”

Avantax Acquires Integrated Tax & Wealth Strategies Wealth Management Business

Avantax Inc., a provider of tax-focused financial planning and wealth management, has acquired the wealth management business of Integrated Tax & Wealth Strategies, an independent wealth management firm with $760 million in total client assets, as of December 31.

Integrated Tax & Wealth Strategies’ founder Brian Stephens will continue with the tax practice. Integrated Tax & Wealth Management’s other financial advisers and wealth management team have become W-2 investment adviser representatives of Avantax Planning Partners.

“I’ve seen several other advisers align with Avantax Planning Partners, and while I looked at various options even outside of Avantax, I realized that other broker-dealers don’t understand our business model where tax preparation is such a key component of the investment relationship,” Stephens said in a statement. “I feel Avantax is the right answer because they are 100% aligned with my belief that the best solution for clients is to keep investment and tax preparation tied together.”

Stephens’ wealth team, including Matt Murch, Joseph Webster, Sabrina Pledger, Amy Villarreal, Kyle Pledger and Cheryl Wright, have joined Avantax as employees and will continue to support the relationships the team has built over the past 25 years.
Compliance May 17, 2024

Reg S-P Requires Advisers to Inform Customers of Data Breaches

In addition to other registrants, advisers will have 30 days to inform their clients of any substantial data breach.

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The Securities and Exchange Commission finalized amendments to Regulation S-P on Thursday. The rule will require broker/dealers, registered advisers, investment companies and transfer agents to develop policies to protect customer data and to inform affected customers of a data breach within 30 days.

The updates to Reg S-P were first proposed in March 2023. Like the proposal, the final rule requires covered institutions to maintain written policies that are “reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information,” and maintain an “incident response program.”

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Covered parties must also “provide notice to individuals whose sensitive customer information was or is reasonably likely to have been accessed or used without authorization.” This notification must take place “as soon as practicable, but not later than 30 days” from when the institution learned of the breach.

SEC Chairman Gary Gensler explained in a statement that the purpose of customer notification is to “help ensure that customers receive sufficient notice to take measures to protect themselves from harm that might result from the breach.” Under pre-existing rules, there is no mandate to inform customers of a breach, according to Gensler.

In the event reporting a breach to a customer could compromise national security or public safety, the attorney general may request a 30-day extension. The final rule said that the SEC would also consider additional delays. In response to commenters, the SEC indicated that it has created an interagency line for this purpose and guidance on how covered parties can request an exemption. It also clarified that local and state law enforcement can make such a request on their own behalf.

David Oliwenstein, a partner with Pillsbury Winthrop Shaw Pittman, says that covered parties must disclose a breach unless the party reasonably determines that there is minimal risk of “substantial harm or inconvenience” regarding sensitive customer information. He says that they will have to “apply a commonsense framework” since this phrase is not specifically defined.

Oliwenstein says the SEC will expect covered parties to have policies on employee training, network security, internal notifications, and the confirmation and classification of incidents. There will also be an “expectation from the regulators that registrants actually take measures to test the adequacy of their programs,” which can include the simulation of a breach to “see how folks respond internally, and identify weaknesses.”

Larger institutions will have 18 months to comply with the rule and smaller institutions will have 24 months from the effective date, which is 60 days after its entry in the Federal Register. The proposal initially provided for 12 months for both.

 

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