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BOSTON – After more than 15 years as a venerable, independent industry force, Linsco/Private Ledger announced on Oct. 27 that it will sell a 60% stake in the company to two private equity firms. LPL said it will sell its majority to Hellman & Friedman LLC of San Francisco and Texas Pacific Group, which has offices in Fort Worth. Under terms of the definitive agreement, LPL has been valued at $2.5 billion. Following the transaction, LPL’s founders and employees will retain approximately 40% of the company’s equity. With headquarters in Boston and San Diego, according to LPL, it is the country’s largest independent brokerage firm with revenues of $1.1 billion and more than $100 billion in assets under management as of 2004. It counts 140 credit unions among its more than 6,000 financial institution client base. “This transaction provides LPL with world-class partners who are committed to growing our company under the same business model and operating team that have made LPL the independent brokerage firm of choice for over 6,200 financial advisors nationwide,” said Mark Casady, LPL president/CEO. Several key changes at the top tier will take place following the deal’s closing, which is expected by year-end. Casady will retain the president/CEO role and become board chairman. Current Chairman and Founder Todd Robinson will retire but will continue to serve as chairman emeritus. Co-Founder and Current Vice Chairman Dave Butterfield will retire and Co-Founder Jim Putnam will remain as vice chairman and continue to serve on LPL’s board. Esther Stearns will continue as COO. Casady told Credit Union Times no other management changes will occur as a result of the transaction including any layoffs. Both offices here and in San Diego will remain open, he added. LPL has more than 1,200 employees. Credit union clients will see no changes either. “It’s important to hit the point that there is no change to the company, just the corporate structure,” Casady said. “The new majority owners see what the previous owners saw and they are absolutely committed to what we’ve built over the years.” Casady said sale discussions began over the summer and the deal came together in September. After talking with other firms, LPL went with Hellman & Friedman LLC and Texas Pacific Group because of their thorough understanding of the broker-dealer’s business model. “The firms truly understand the relationships we have with our clients, whether it be credit unions or banks or independent contractors. Our business model is very straightforward,” Casady said. The decision to sell a majority stake was tied to wanting Robinson to have equity. “Todd was the largest before (the transaction announcement) and he will be the largest after,” Casady said. “Looking ahead, this will be a seamless transaction that leads LPL and our financial advisors on a continued path of success under the traditions and sound business model that Todd Robinson originally set forth.” Robinson, a former Smith Barney broker, bought Linsco in 1985 and Private Ledger in 1989. Both brokerage firms were merged in 1989 to become the current LPL. Hellman & Friedman LLC is a San Francisco-based private equity investment firm with additional offices in New York and London. Since its founding in 1984, the firm has raised and managed more than $8 billion of committed capital and invested in approximately 50 companies. The firm saw LPL as a “great fit” with its “strategy to invest in top quality franchises with superior management teams and strong growth prospects.” Texas Pacific Group (TPG), founded in 1993 and based in San Francisco, London and Fort Worth, Texas, is a private investment partnership managing more than $15 billion in assets. TPG has extensive experience with public and private investments executed through leveraged buyouts, recapitalizations, spinouts, joint ventures, and restructurings. “The industry is evolving rapidly, and LPL and its financial advisors are well-positioned to capitalize on emerging opportunities,” said Richard Schifter, a partner at TPG. “We look forward to working closely with Mark Casady and the rest of his team in the coming years to strengthen and build upon the leading position that LPL and its advisors hold in the industry.” Casady said while LPL’s new owners hope to take the firm public, there is no intention of selling the broker-dealer to other firms beyond that move. “What they want us to do is keep doing what we’ve done well for almost 20 years,” Casady said. “One of the ways we’ve been successful is making sure that the advisors have been happy.” To that end, Casady emphasized that LPL’s financial advisors will continue to be “the most important people in this company, and we will continue to focus on providing them with the support, services, and infrastructure to succeed” including continued access to a wide selection of non-proprietary financial products. With the backing of Hellman & Friedman and TPG, LPL is also looking at investing in and growing its abilities to offer expanded research services, leading-edge technology and “superior” office support for its financial advisors and their local operations. Meanwhile, the transaction is still subject to a number of customary closing conditions, including regulatory approval from the OCC and NASD, among others. [email protected]

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