NEWPORT BEACH, Calif. - Add Captrust Financial Advisors to the growing list of would-be national RIAs.
The firm, which specializes in retirement planning services for institutions and individuals, hopes to have retail advisory offices in the country’s top 35 metro markets within 10 years, says Fielding Miller, the firm’s CEO.
Captrust currently has advisory firms in 18 markets.
The employee-owned RIA, which oversees nearly $240 billion in institutional assets and has about $6 billion in retail AUM, has been an aggressive buyer so far this year, completing seven deals totaling over $1 billion in assets.
The most recent transaction brought in Davidson & Garrard, a Lynchburg, Virginia-based RIA with $685 million in AUM, according to D&G’s latest Form ADV. Principals Bill Paxton, Dave Hansen, Jack Flippin and Steve Crank will remain with the firm, which will operate under the Captrust brand.
D&G fits Captrust’s business strategy, says Miller, who spoke to Financial Planning at the annual Deals & Deal Makers conference. “We want to acquire wealth management firms in cities where we have institutional practices and meld them together,” Miller says. “Our institutional 401(k) business is a great generator of wealth management clients.”
PRIVATE EQUITY ALTERNATIVE
Captrust’s ability to integrate its acquisitions (the company claims a 100% retention rate) is one of its key strengths, says M&A consultant David DeVoe. What’s more, Captrust’s resistance to taking private equity helps the firm stand out from other acquirers, he says.
In the future, however, “the company may be challenged to maintain their steep acquisition trajectory without exploring securing new sources of capital,” DeVoe adds. “They have a solid track record for acquiring on the retirement side, but have yet to show as much momentum on the RIA side.”
Miller says Raleigh, North Carolina-based Captrust is targeting top markets to acquire advisory firms that have between $350 million and $1.1 billion in AUM. The RIA values sellers at a multiple of EBITDA and makes acquisition offers that are a split of cash and at least 50% equity, he says.
In an industry where RIA buyers are increasingly backed by private equity firms, Miller says not having PE backing is an advantage. “It’s a differentiator,” he asserts. “We’re not beholden to anyone, and we control the clock.”
