M&A Isn’t Just for Older RIA Founders
Younger RIA owners are often looking to sell, and they consider how clients and staff will be treated in the long-term when making decisions.
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Here’s a little exercise: Close your eyes and imagine an RIA founder who just sold to a big private-equity backed acquirer.
You might not be picturing someone in their mid-40s who still expects to work at the firm for another 20 or 30 years. But that’s the situation Matthew Woods found himself in earlier this year when his firm Waypoint Wealth Counsel sold to MAI Capital Management. At the time, Waypoint managed nearly $500 million and served about 100 wealthy households. A sizable firm to be sure, but one that on paper also had significant room to run before turning to dealmaking as a scale play or succession strategy. So, what drove the decision?
“It was a combination of factors,” Woods said. “We were running up against infrastructure issues when it came to delivering that family-office-like level of service that clients increasingly expect. … I have a long runway to go, but succession planning and business continuity were also a part of it.”
Taxes and Training
Wealth management clients seem to be more discerning and more demanding today than they were even five years ago. That’s been Woods’ experience, especially in the high- and ultrahigh-net-worth client segment, and it’s also borne out by survey data:
- Firms focused on the high-net-worth market offered an average of 12 services covering areas like tax planning, cash management, trustee services and asset allocation, per research last year by Cerulli Associates.
- Practices focused on ultrahigh-net-worth clients now frequently offer private banking, business planning, foundation management and lifestyle services.
“We have won some ultrahigh-net-worth clients, so we were really feeling the need to either build more of that infrastructure ourselves and do more hiring, or do something strategic and join a larger firm that’s already operating in that space,” Woods said. “We chose the latter.”
Going for Growth. Waypoint was supported in the transaction by experts at Colchester Partners, a boutique investment bank and strategic advisory firm. Managing Director Brian Lauzon said the transaction fits a growing pattern.
“Younger, growth-minded founders are motivated by the prospects of higher organic growth that is possible as part of a larger, well-resourced organization,” Lauzon said. “Along with enhanced growth prospects, in some cases they do view a merger as creating a clearer path for their long-term succession and continuity for their clients.”
