One of Focus Financial Partners' most expansion-minded firms has served notice it is considering a national footprint.
Boston-based Colony Group made its first move outside the eastern U.S., merging with Jones Barclay Boston, a boutique advisory firm from Denver.
The deal bulked Colony Group up to $5.5 billion in assets under management. Colony has not hesitated to use Focus' capital to help fund its rapid inorganic growth through mergers and acquisitions. In March 2015 it merged with CapGroup Advisors, a fellow Focus firm. Colony joined Focus in 2011.
Jones Barclay Boston, which reported $315 million in AUM in its latest SEC disclosure, specializes in working with athletes and entertainers, as well as corporate executives, entrepreneurs and lawyers.
DEAL TERMS
The deal was for cash and equity, says Colony CEO Michael Nathanson.
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The Colony Group has agreed to turn a stake equaling 40% to 70% of its earnings over to Focus Financial Partners, but it is holding on to its independence and plans for aggressive growth.
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While its still unclear as to whether The Colony Group and Focus Financial Partners union announced last week is the largest merger by assets under management completed in the RIA space so far this year, one thing is certain: the deal is sophisticated and accomplishes strategic and financial goals for both firms at the same time.
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The newly combined Boston-based RIA will have $2.5 billion of client assets.
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"We were attracted to their people, and it's our first office west of the Mississippi," Nathanson says. "Jones Barclay Boston has a terrific group of advisers and in the war for talent, we find that mergers are an extremely effective and highly efficient way of bringing in new talent."
Colony, a fee-only advisory firm, also operates six other offices in Massachusetts, New York, Virginia, and Florida. The firm’s employee headcount grew to nearly 100 under the new deal. Eight staff members from Jones Barclay will now work out of Colony’s new Denver office.
COLONY AND FOCUS ON THE PROWL
Focus, one of the industry's leading aggregators, pulled off two of the larges M&A deals of 2016, bringing in Douglas C. Lane, a $4.4 billion AUM firm and the $3 billion AUM Kovitz Investment Group. Crestwood Advisers, a firm with $1.3 billion in assets joined Focus at the beginning of the new year.
Colony has also been an active acquirer since joining Focus five years ago.
"The sub-acquisition trend continues to yield results, with both Colony and Mercer both putting their parent company's capital to work" notes M&A expert David DeVoe. "The sub-acquisition strategy will likely drive a new wave of M&A activity in the $100 million to $500 million RIA segment.
"Acquiring a Denver-based firm, Colony has demonstrated it's aspirations are a mile high and fall well outside of the Eastern seaboard" De Voe continues. "The company is also expanding it's client base to include the lauded, yet fickle, market of professional athletes."
Two of Jones Barclay Boston's partners, Ian Barclay and Craig Jones, became co-presidents of Colony’s newly launched sports and entertainment practice through the acquisition. Barclay and Jones also will become partners in Focus and TCG Partners, the management company that runs Colony Group.
A third partner, Mike Boston, has opted to leave his former company.
