Hybrid firm to acquire $2B RIA in first M&A deal

A hybrid registered investment advisory and turnkey asset management firm with major growth goals secured an agreement to acquire a company managing $2 billion in client assets.

Los Angeles-based Signature Estate & Investment Advisors will acquire Cleveland-based Cedar Brook Group — another hybrid RIA with three offices and 21 financial advisors — the firms said April 30. The expected June close of the deal with undisclosed financial terms will push Signature's client assets above $22 billion, close to halfway to founder Brian Holmes' stated goal of reaching $50 billion by 2027. 

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Two years ago, Signature picked up a majority-stake investment from Advisor Group's private equity backer, Reverence Capital Partners, and another influx from Advisor Group itself as the buyer of a minority stake. In that span, Signature's assets have grown by a quarter to $20 billion across its direct client base and outsourced turnkey strategies for other advisory practices. While the firm has purchased some advisors' books of business in the past, Cedar Brook represents its first traditional M&A deal and foothold in the Midwest.

Signature's expansion displays how it's "providing more services, more resources" to an eventual team of 155 advisors and employees in 20 offices upon completion of the deal and that it's "trying to be the best financial advisor in the nation," Cameron Stagg, the firm's director of M&A analysis and valuation, said in an interview.

"It's more about getting better than it is trying to reach a certain number," Stagg said. "We're not doing any deal just to do a deal."

As part of the agreement, Cedar Brook will drop its current brokerage, Atria Wealth Solutions' Cadaret Grant, and begin using Signature's broker-dealer, Signature Estate Securities. At the time the firm moved to Cadaret Grant from Securities America in 2021, Cedar Brook was its largest ever recruit. With offices in Harper Woods, Michigan, and Bethlehem, Pennsylvania, in addition to its Cleveland headquarters, Cedar Brook will act as a new regional hub for Signature with knowledge of additional potential acquisitions and recruits in the area.

"We can talk Midwest; they can talk SoCal," Cedar Brook CEO Bill Glubiak said in an interview. "That actually will be very helpful when we grow."

Representatives for LPL Financial — which is buying the parent of Cadaret Grant and a half dozen other midsize brokerages under Atria's umbrella as part of a pending acquisition — declined to comment, citing the firm's policy against discussing individual advisor or team moves.

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After a slight dropoff in M&A transactions last year, the volume of deals across the industry in the first quarter confirmed the optimism of many experts who predicted that the activity would pick back up in 2024. The number announced in the first three months of the year jumped 20% from the same period in 2023 to 90 — the second highest total ever recorded in a first quarter by investment bank and consulting firm Echelon Partners.

"It's worth noting that most transactions typically take an average of nine months to complete, suggesting that the increase in Q1 activity likely reflects deals from 2023 extending into 2024," the firm said in its latest deal report. "Strategic acquirers continue to play a dominant role in the wealth management M&A landscape, accounting for an impressive 85.6% of transactions in 1Q24. These players (and their financial backers) are deploying substantial capital towards M&A, underscoring the industry's ongoing focus on consolidation and realizing synergies."

The M&A numbers in the first quarter display how "we're going to see ebbs and flows in activity, but overall it's very strong," said John Langston, CEO of RIA investment banking firm Republic Capital Group. Firms with anywhere between $10 billion and $30 billion in client assets are stepping in as an alternative to giant acquirers that are pulling back their volume of deals a bit after reaching the hundreds of billions of dollars, Langston said in an interview.

"I think we have the mega firms digesting, and the up and coming firms filling the gap of acquisitions," he said.