Moody's assigned Aretec Group Inc. a B3 corporate family rating after the announced sale of the company to Genstar Capital LLC.
Factors for the rating include the company's high debt/EBITDA of around 7.5x pro forma the acquisition, a stabilizing financial adviser base, favorable macroeconomic and market environment and growing client asset levels, Moody's said. The increase in debt pressures the company's financial flexibility but its ability to retain advisers allows it to regain its revenue growth targets at a faster pace, the rating agency added.
The rating also reflects a difficult operating and regulatory environment for independent broker/dealers requiring them to constantly invest in systems and processes to maintain their compliance.
The ratings outlook is stable due to the stabilizing financial adviser base and client assets under administration.
Aretec Group is holding company for Cetera Financial Group Inc.