Flush with PE cash, M&A deals for RIAs accelerate

Focus Financial Partners has added a $4 billion RIA from Cincinnati to its roster, further accelerating an already red-hot M&A market fueled by private equity capital.

Bartlett & Co., which is changing its name to Bartlett Wealth Management, will partner with Focus in a deal involving cash and equity. Bartlett CEO Kelley Downing would not say if Focus, flush with cash from a private equity capital infusion last year, bought a majority or minority stake in the firm, whose origins go back to 1898.

The deal follows a strong month for M&A transactions in January.

There were 13 transactions involving $21.5 billion in AUM last month, more than three times the dollar volume for the 16 deals tracked in January 2017, according to Fidelity's Wealth Management M&A Transaction Report. Six of last month’s deals involved private equity capital.

In a hot M&A market with high quality firms attracting a surfeit of suitors, Bartlett had plenty of options.

Focus won out because it allowed Bartlett to maintain its autonomy and offered a solid succession plan, Downing says. What's more, Focus' competitors "were not a good cultural fit," she added.

Bartlett was also attracted to Focus because of the capital that would be available for acquisitions, Downing said. "That was a unique aspect of Focus," she explained.

Indeed, two of Focus' longtime partners, Colony Group and Buckingham Strategic Wealth, are well known for leveraging capital from the parent firm to make numerous sub-acquisition deals for smaller firms.

The M&A war chest for Focus partners got even bigger last year, thanks to a cash infusion when private equity firms KKR and Stone Point bought a majority stake in the aggregator last year.

Focus has subsequently added around two dozen firms, including a deal bringing Cornerstone Wealth Group, a former LPL Financial firm with $800 in AUM, into the fold last month.