a special-purpose acquisition company, is merging with Wentworth Management Services, in a move slated to take the broker-dealer aggregator public.
Under the deal announced late last week, Kingswood Acquisition and Wentworth Management will become wholly-owned subsidiaries of a new entity, Binah Capital Group. The combined public company is expected to have more than 1,900 advisors, $25 billion in assets under management, and more than $285 billion in affiliated assets under management, according to a press release. Wentworth owns and operates four broker-dealers, with 535 offices nationwide, the press release said.
“By combining forces with KWAC, our organization will have access to the public equity markets, which we anticipate will provide capital to fund future growth initiatives and operational enhancements,” said Craig Gould, president of Wentworth Management, in the press release. He will become president of the new entity when the deal closes, which is expected in the fourth quarter.
The deal comes as many SPACs founded the same year as Kingswood are struggling to clinch deals. The IPO market has been hampered by multiple issues including a stock market decline, a prolonged war in Ukraine, inflation, and recession concerns. That has sparked the possibility that many of the SPACs that launched in 2020 could have to return investors’ money.
“A record number of existing SPACs are actively seeking targets with the majority of them facing potential expiration in the next year,” EY said in a recent press release. What’s more, “an overwhelming majority” of U.S. IPOs from last year are trading below offer price, EY said. This continues to have a dampening effect on investors’ appetite for IPOs.
Under the merger agreement, Wentworth’s shareholders will maintain ownership positions in the company and will receive no cash proceeds.