Blucora expects the acquisition of HK Financial Services to add around $4.4bn to its total client assets, taking its total to over $72bn


Blucora agreed to acquire HK Financial Services (Credit: Pixabay/Capri23auto).

US-based tax-smart financial solutions provider Blucora signed an agreement to acquire HK Financial Services (HKFS), a privately-held CPA-focused registered investment advisor (RIA), for $160m in an all stock transaction.

Blucora expects the acquisition of HK Financial Services to add around $4.4bn to its total client assets, taking its total to over $72bn, with nearly 42% in advisory assets.

Blucora president and chief executive officer John Clendening said: “This transaction further reinforces Blucora’s strategy of delivering tax-advantaged wealth management solutions to advisors and end-clients while maintaining healthy margins and profitable growth.

“We look forward to joining with HK Financial Services to provide more CPA firms, advisors and end-clients with additional capabilities and choice, while providing our Avantax advisors new opportunities for growth, broader solution sets, efficiency and profitability.”

The transaction will expand Blucora’s footprint in tax-aware investing space

Blucora operates in wealth management and tax preparation segments, through Avantax Wealth Management business, and TaxAct business.

The proposed transaction would expand its footprint in tax-aware investing and enhance its client service capabilities.

The deal is expected to increase the company’s total market by foraying into the captive RIA space, which is an evolving segment in the wealth management industry, with striking recurring revenues.

It would expand the Bluecora’s product offerings and expand the reach of its Tax-Smart Investing software, to serve more CPA firms and tax professionals, along with end-to-end retirement plan services for small business clients.

In addition, the transaction would enhance its revenue growth rate, increase margins and enhance growth and profit engine in HKFS.

The transaction is expected to be finalised, subject to regulatory approval and customary closing conditions, in the end of the first quarter of 2020.

HK Financial Services president Louie Rosalez said: “Blucora embodies our mission to take a holistic approach to serving our clients’ wealth management needs, and is the ideal partner for HKFS.  We look forward to working together with them to provide the best products, solution and service to clients.”