Ted Charles Gets $14 Million Transition Out Of Investors Capital

Wednesday, August 03, 2011 06:23
Ted Charles Gets $14 Million Transition Out Of Investors Capital

Tags: independent broker-dealers | retirement plans

Now that the sale of his 55% stake in the broker-dealer he founded, Investors Capital Holdings, is done, Ted Charles is retiring. Think of this as a high-end succession plan, not a distressed sale.

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In fact, Charles ultimately priced his 3.6 million shares of ICH for $4.25 apiece, netting over $14 million after fees.


The stock hasn't traded that low since January, making it an easy sell for underwriter Sterne Agee to move on the open market.


It turns out that ICH employees -- including some of its 500-plus reps -- and clientele bought a lot of the shares, putting an end to talk of a merger with a larger rival like LPL.


Unless a decent chunk of Charles' shares went to insiders, ICH would be unable to go on calling itself the only publicly traded employee-owned firm in the business -- a factor deeply important to him.


"I wanted it to remain a publicly traded firm where advisors are truly independent and in charge of their own destinies, unencumbered and uncontrolled by a dominating entity such as an insurance company, private equity firm, or majority shareholder," he says.


Charles himself is retiring after 19 years at the top of the firm he founded back in 1992.


He leaves on a relative high note: annual production has doubled in the last five years to roughly $162,000 per rep.


In terms of transition packages, the sale values ICH at roughly three times the firm's trailing revenue, which puts it well within traditional industry norms.


Tim Murphy will remain CEO, but now a new chairman needs to be elected.


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