$6 billion RIA Mercer sold in PE deal

Genstar Capital is buying the large Santa Barbara, Calif., RIA from former PE owners Lovell Minnick Partners

Mar 25, 2015 @ 2:20 pm

By Mason Braswell

As the market hits new highs, registered investment advisers bought five to seven years ago by private equity firms are starting to look ripe.

That's the case for Mercer Global Advisors Inc., a large Santa Barbara, Calif.-based RIA with $6 billion in assets under management. A deal was announced Wednesday in which its private-equity owner, Lovell Minnick Partners, sold the firm to Genstar Capital, another middle-market private equity firm.

Mercer, a fee-only firm with 15 offices nationwide, had about $4 billion in assets under management when it was acquired in May 2008, according to Jeffrey Lovell, chairman of Lovell Minnick Partners. That number dropped to as low as $3 billion after the 2008 financial crisis, according to Mr. Lovell.

(Related read: The robo-fication of RIA deal making)

“We bought them at sort of the peak of the market,” Mr. Lovell said. “We weathered the storm with management and the company got positioned for growth and…the company has had a nice recovery.”

Terms of the deal were not announced, but Mr. Lovell said the investment in Mercer “has turned out quite well.”

The deal marks the third transaction in investment management for Genstar, which also owns AssetMark Inc., a platform with about $25 billion in assets under management. It also has stake in Altegris, an asset management company focused on alternative investments.

(RIA data: Top-ranked fee-only RIAs by region)

Mercer ranks among the top 25 RIAs, according to InvestmentNews' annual list of the largest fee-only firms. It manages money mostly for mass affluent and high-net-worth clients.

Fresh capital from Genstar will help Mercer continue the momentum, according to Mercer's chief executive, David Barton. Under Genstar, Mercer is aiming to grow to 50 to 60 offices, serving more than 20,000 clients, up from about 4,300 now, according to Mr. Barton.

“[Genstar] has a long record of investing and growing their portfolio companies, and that's what we need,” he said. “We've build the chassis, and it's a beautiful car, but it needs some gas.”

Mr. Barton said that his firm and Genstar had shown mutual interest in a possible deal for the past two years.

The transaction is expected to close in the second quarter.


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