In a rare sign of the complexities of the record-shattering volume of RIA M&A deals, a billion-dollar practice is retaining its brokerage affiliation after selling to a consolidator.
Private equity-backed Mercer Advisors, one of the largest RIAs and most active buyers driving the massive deal flow, has acquired Atlanta-based ACG Wealth, the firms
The transaction of an undisclosed amount bought out the one-third stake in ACG previously held by Arkadios founding owner David Millican, Shaver noted in an interview. He and the third co-founder of ACG, Jody Young, are no longer passive owners of Arkadios, either. While the ongoing relationship between ACG and Arkadios will only span part of the roughly $300 million in non-advisory assets managed by the RIA, the combination will add up to one of the few Mercer practices with a brokerage affiliation. It’s a novel twist to the deal in favor of Arkadios, since few BDs hold onto any ties to a team folding into an RIA consolidator. Mercer and firms such as Mariner Wealth Advisors, Wealth Enhancement Group and Focus Financial Partners rival IBDs in the recruiting wars for advisors leaving wirehouses or other brokerages.
Shaver and the rest of the ACG team “really haven't given a ton of thought” to its BD affiliation since the vast majority of its assets are held by Fidelity as its custodian, and they have no plans in the foreseeable future to follow the path taken by other practices going to new brokerages or dropping FINRA registration entirely, he said. In fact, the lack of massive change coupled with expansion potential and new resources for clients attracted ACG to the deal.
“We don't really have to tweak much to mold into their platform,” Shaver said. “It's really not a big step for us to do, and they just already have it in place for our clients.”
ACG had been
“Arkadios acts or serves as the BD for any commission business that advisors at ACG do, which this acquisition will not affect,” Arkadios Business Development Director Chris Mielnicki said in an emailed statement. “The ACG advisors will still place BD business through Arkadios like they had before the acquisition.”
Consolidation trend
At 11 deals announced in 2021 by the end of the third quarter, Mercer trails only the 13 unveiled by Wealth Enhancement and Focus Financial among the most active acquirers of the year,
“These firms typically have a business model centered around scale and rely heavily on M&A activity to drive growth and expansion,” according to Echelon’s third-quarter report. “This is another data point that highlights that the ongoing industry wide consolidation is being driven by a small number of incredibly active firms who aim to use M&A as a primary source of growth while also capitalizing on the significant efficiencies that come with this increased scale.”
ACG and Arkadios represent a key part of the story behind the massive wave of RIA consolidation sweeping the wealth management marketplace. Independent BDs are playing an important role in the RIA rollup trend, whether as competitors on the recruiting trail or as service providers to the buyers. For example, Wealth Enhancement Group uses LPL Financial as its main broker-dealer. It’s technically a hybrid RIA and office of supervisory jurisdiction of LPL, just like ACG with Arkadios, even though Wealth Enhancement is much larger and
Another big LPL enterprise that’s also a hybrid RIA, Waltham, Massachusetts-based Integrated Partners, has assisted its advisors in making about a dozen M&A deals among practices carrying out succession plans or selling their books of business, according to Chief Growth Officer Robert Sandrew. PE firms and other potential suitors call or email Integrated founder Paul Saganey on a near-daily basis to ask whether the rapidly growing firm is seeking any deals, he said. At more than $13 billion in client assets by the end of the year, Integrated will have nearly quadruple the amount it did only five years earlier, according to the firm.
“We have a long term vision for Integrated Partners, so it's not like we're trying to get something completed by even the next few years here,” Saganey said. “When you can think long term, you're not attracted by every bright shiny object out there.”
Still, he and Saganey acknowledge that many practices are seeking a shorter ramp time into the flexibility and scale that can often result from folding into a larger firm.
Southeast locations
In addition to its headquarters in Atlanta, ACG has offices in New York; Raleigh-Durham, North Carolina; and St. Simons, Georgia. ACG currently works with 900 households, and it plans to get back above $2 billion soon by enlarging its footprint throughout the Southeast under Mercer, Shaver said, citing the firm’s 401(k) services and other back-office resources around such areas as compliance and billing.
“They're really going to be able to step into it and help us expand,” Shaver said, sharing some key lessons from the firm’s search for other advisors considering a deal. “You can't just look at the money only. ... It really has to be a great fit for your clients.”
PE firms Oak Hill Capital and Genstar Capital
They “were looking for the corporate architecture necessary to make their business hum with high proficiency,” Barton said. “We added the 'hum' and together we present a formidable team expanding our already dominant presence in Atlanta and Southeast generally.”
