Mercer Advisors merges with Kanaly Trust to create $8B advisory firm

The deal is the latest sign of ramped-up dealmaking in RIA industry

Mar 28, 2016 @ 11:42 am

By Christine Idzelis

+ Zoom

Mercer Advisors, the parent of registered investment adviser Mercer Global Advisors, is merging with Kanaly Trust to create a more than $8 billion-asset firm.

Both Mercer and Kanaly are owned by private equity firms. Genstar Capital-backed Mercer has more than $6 billion of assets under management, while Lovell Minnick Partners-owned Kanaly oversees more than $2 billion, according to a joint-company statement Monday. Terms of the deal weren't disclosed.

RIAs have been looking to growth through acquisitions, ramping up dealmaking over the past couple years with record activity that may continue in 2016 with the help of private-equity firms. Last year there were 13 mega-deals — those done by wealth managers with at least $5 billion of assets — jumping from just two in 2014, according to consulting firm DeVoe & Co.

“The merger with Kanaly Trust is a significant step forward toward scaling a national wealth management firm to a broader base of sophisticated clients,” Anthony Salewski, a managing director at Genstar, said in the statement. “We plan to continue to invest in and support the company as it continues to build its presence in the wealth management sector.”

Private-equity firm Genstar Capital acquired Santa Barbara, Calif.-based Mercer Advisors from Lovell Minnick Partners last year, according to a March 2015 announcement of the agreement.

The merger with Kanaly requires regulatory approval.

Mercer is a fee-only investment management firm with more than 5,000 clients, while Houston-based Kanaly advises more than 500 families while serving as trustee or executor for estates totaling more than $2.5 billion, according to the statement.

Private-equity firm Lovell Minnick Partners will have a stake in the combined company, which will be led by Mercer's chief executive officer David Barton.

While Kanaly isn't set up as an RIA, the firm similarly offers wealth management services to high-net-worth individuals, Mr. Barton said by phone. The firm also acts as a corporate trustee for high-net worth families, a service that Mercer currently doesn't provide, he said.

This is Mercer's first large purchase, according to Mr. Barton, who said the merger should be completed in May.

"Acquisitions are going to be part of our overarching strategy in the next several years," he said, noting that the firm added more than $1 billion of clients assets last year from organic growth alone.

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