PE-backed RIA to reach $29B with latest M&A deal

One of the nation’s largest hybrid RIAs is adding nearly $2.5 billion in client assets through the two M&A deals it has unveiled this year.

Wealth Enhancement Group — majority-owned by funds affiliated with private equity firm TA Associates — agreed to acquire North American Management, a Boston-based firm catering to ultrahigh-net-worth clients with $1.75 billion assets, the parties announced March 2. They didn’t disclose the terms of the deal, which is expected to close in April.

Prior to the deal for the 93-year-old practice, Wealth Enhancement closed its acquisition of another RIA with $727 million in client assets. After closing its latest deal and acquiring a trust firm, the firm says it will reach $29.4 billion in client assets. Acquirers like Wealth Enhancement have juiced M&A deals for wealth managers with at least $1 billion to a record volume.

“Our goal in identifying a new strategic partner was not simply to join a larger platform, but to find a home for our clients that will last for decades to come as we work to guide them toward their financial goals,” North American CEO Robert Scott said in a statement.

North American has 20 employees, including nine advisors, working in its two offices in Boston and St. Louis. At the end of 2019, it had 410 client relationships and $1.6 billion in assets under management, according to the firm’s website — an average of $3.9 million per client. The firm terminated its soft-dollar benefits program in 2020, its SEC Form ADV brochure states.

Wealth Enhancement uses LPL Financial as its broker-dealer, but North American, a fee-only firm, operates without any brokerage affiliations. After the deal closes, North American plans to change its name to the North American Management Team at Wealth Enhancement Group. Park Sutton Advisors represented the RIA in the transaction.

North American’s “success in building multigenerational client relationships is a model for our team, and will further expand Wealth Enhancement Group's ultrahigh-net-worth and trust services capabilities, among many other benefits,” Wealth Enhancement CEO Jeff Dekko said in a statement.

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Wealth Enhancement’s earlier deal for Reby Advisors closed on March 1. The acquiring firm completed six other deals in 2020, a year that saw the eighth consecutive record for the number of M&A transactions in wealth management, according to investment bank and consulting firm Echelon Partners. Also last year, the amount of sellers with at least $1 billion in client assets jumped 37% to a record 78.

Citing an “ever-increasing buyer appetite” for wealth managers of that size, Echelon notes such firms provide steady revenue streams and an excellent point of entry for acquirers looking to get into the sector, according to the firm’s annual deal report.

The resources of “professional acquirers” like Wealth Enhancement are also fueling the mega-deals, Echelon says.

“During 2020’s early volatile period, larger buyers with dedicated management, M&A and integration teams remained focused on their plans to identify and execute deals,” the report says. “A number of firms accelerated discussions, as sellers were looking to close transactions before the end of 2020 in anticipation of potential tax changes that could be introduced in 2021 by the new presidential administration.”