United Capital announced Monday a liquidity program that allows advisors who have been with the firm for at least six years to convert up to 25% of holdings in company stock to cash.
"We've been growing the company now for going on nine years, and virtually all of the advisors who join us, join us through a sale of their previous business," Gary Roth, CFO of United Capital, told ThinkAdvisor on Thursday. He noted that those advisors typically take a portion — "sometimes a very substantial portion" — of the purchase price in stock.
"We thought it was the right time to start a program internally to create some liquidity for the people who have been holding the shares for at least six years," he said.
United Capital announced the program to its advisors in the fourth quarter of last year and began the first round of liquidity in January and February.
Clive Cholerton, a managing director with United Capital based in Boca Raton, Fla., was one of the advisors who participated. He joined the firm in February 2007.
"When United purchased my independent practice, part of the deal was I took stock in the company," Cholerton told ThinkAdvisor. "Now, this event gave me the opportunity to realize some of the actual investment that I had in the company."
Cholerton said that he first heard of United Capital when he hired Angie Herbers (who is a writer for Investment Advisor and ThinkAdvisor) as an independent consultant as he tried to separate his partnership with accounting firms who were minority shareholders. "We started to realize that our paths were going in different directions, so we looked for a way of unwinding the partnership," he said. "What was so appealing to me was here was a company that was doing exactly what I wanted to be doing, only doing it better, and with bigger and better toys."
Roth, who is based at the firm's headquarters in Newport Beach, Calif., noted that the firm recently acquired a round of private equity capital. "The vast majority of that is earmarked toward other acquisitions and new growth strategies, but we all agreed to use a portion of the money on our balance sheet to create a liquidity pool for our advisors," he said.
