Private Equity Buys Into the RIA Business

In mid-October the registered investment adviser community woke to the news that Edelman Financial Services, one of the largest independent RIAs in the U.S., had agreed to sell a majority interest to private equity giant Hellman & Friedman. The transaction, believed to be the biggest-ever private equity investment in a pure-play, fee-basedria., signals rising interest in the space among institutional asset managers.

“它确保了我们未来的未来和方向，让我们能够执行我们的目标，以达到数百万美国人与投资者专注于大规模富裕市场的合作伙伴关系，”Ric Edelman，创始人，主席和首席执行官他同名的Fairfax，基于弗吉尼亚州的公司，该公司设定了大约150亿美元的资产。

ria.mergers and acquisitions remained strong in the first half of 2015, building on the momentum of the previous year. Through June there were 61 takeovers, an 84 percent surge over the 33 deals during the same period in 2014, according to DeVoe & Co., a San Francisco–based RIA industry advisory firm. Banks and financial intermediaries, including private equity firms, made the biggest increase in acquisitions, accounting for 17 percent of the total after striking no deals in 2014.

According to Edelman, San Francisco–based Hellman & Friedman is an ideal investor partly because it recognizes that the firm’s business model is personality-driven and wishes to pursue a growth strategy that keeps the same approach. “We will be adding talent and expanding, but not at the expense of institutionalizing our services or turning into a big-box brokerage clone,” he says.

Embracing outside capital from a private equity investor has served Edelman well in the past. In 2012, with the RIA’s share price having failed to recover from the credit crisis, New York–based Lee Equity Partners took it private in a $258 million deal that allowed it to expand its footprint. After the latest deal, senior management at Edelman and Lee will retain minority stakes in the firm.

Although there’s no reliable data on how much buyers are paying for RIAs, well-placed investment bankers agree that valuations rose in 2015. “There has been pretty strong recovery in pricing for independent wealth managers since the crisis,” says Roger Hartley, co-founder and managing member at Mitchell, Hartley & Bechtel Advisers, an independent investment banking advisory firm headquartered outside San Francisco. “But those valuations are very much informed by the unique nature of each business. It’s a robust but discriminating marketplace.”

许多印度try experts regard private equity’s enthusiasm for RIAs as a sign of more deals to come. “It’s a clear indication of the power of the independent model when smart money starts to vote with their pocketbook,” says David DeVoe, founder and managing partner at DeVoe & Co., which advises RIAs on business strategy and consults with breakaway brokers from major banks. “Objectively positioned fee-only advisory firms are clearly a model positioned to win in the years to come.”

迪科认为，过去20年来巩固对冲基金行业 - 从一个焦点的分散的业务关注规模的效率，所以玩家可以随着更多竞争对手竞争进入市场 - 可以提供类似的模拟。

As with hedge funds, size is increasingly important for RIAs. “A decade ago the sale of an adviser with $100 million in assets was a big deal; today the new standard is $1 billion,” notes Michael Bilotta, a managing director at Conshohocken, Pennsylvania–based Gladstone Associates, which advises independent RIAs on mergers as well as valuation, strategic development and succession planning.

正如Bilotta所看到的那样，投资者利息随着独立财富经理部署更加复杂的商业模式而发展。另一个抽奖：有机整合的趋势留下了相对较少的大型和充满活力的公司，可以从寻找深口袋的伴侣受益。

私募股权对独立财富部门的胃口延长了丽莎以超越服务提供商和技术平台。“拥有合作伙伴向我们提供了赚取收购的能力，”奥马哈，内布拉斯加州的CLS投资奥马哈首席执行官Todd Clarke表示。一个外包交易所交易基金投资组合经理，财富经理，CLS在波士顿的私募股权经理TA Associates获得其父母公司Northstar金融服务集团于二月的未公开金额，发现其Coffers。Northstar专注于向Rias和独立经纪人的服务提供服务。

“In an environment with increased competition, fee compression and heightened regulatory costs, scale becomes critical,” Clarke says. “Having the ability to grow by acquiring attractive business models can help us achieve that scale.”

很少有行业内部人士认为，在RIA空间的私募股权投资的步伐将很快缓慢。“我们曾经打电话给他们;现在他们叫我们，“Gladstone的Bilotta说私募股权公司。“因为他们变得更加了解行业，他们不会停止来。”