Raymond James Financial's plan to acquire Silver Lane Advisors is a recognition of the growing merger and acquistion opportunities in the wealth management business.
Silver Lane, founded in 2007, is a boutique investment bank specializing in M&A in the financial services sector in general and the registered investment advisory space in particular.
James Bunn, president of Raymond James Global Equities & Investment Banking, said that advising on mergers and acquisitions has over the past few years become the fastest growing part of the firm's investment banking operation.
But Mr. Bunn said that although Raymond James has its own 400-person investment bank, it was ironic that it did not have anyone focused on the wealth management industry.
"We have a good M&A practice in our financial services group, but we didn't have a practice in the asset and wealth management space," he said.
Following the acquisition, which was announced earlier Wednesday and is expected to close in April, Silver Lane's 10 professionals will join Raymond James' 40 investment bankers covering banks and thrifts, asset and wealth managers, insurance companies, specialty finance companies and business development companies.
Liz Nesvold, founder and managing partner of Silver Lane, is staying on after the acquisition and will head up asset and wealth management investment banking.
Daniel Seivert, chief executive officer at the investment bank Echelon Partners, said the Silver Lane acquisition underscores Raymond James' increased focus on its investment banking business.
"This allows them to effectively add a team where they need more strength and see an opportunity," he said. "Generally speaking, advisory firms are getting larger, which means their enterprise values are getting higher. As a result, the middle market investment banks care more about the RIA space."
Scott Slater, vice president of practice management and consulting at Fidelity Clearing & Custody Solutions, called the Silver Lane acquisition the latest example of where the wealth management space is heading.
"This reflects the evolution of not just the independent wealth management marketplace, but of the broader ecosystem that supports these firms," he said. "As robust M&A activity continues, we'll likely continue to see creative models emerging to service the market."
Jason Carver, vice president of mergers and acquisitions at Carson Group, agreed that the deal reflects the increased pace of consolidation within the RIA space.
"Raymond James clearly sees Sliver Lane as a source to capture a piece of the action to what they are seeing on the RIA and brokerage side," he said. "As M&A continues to pick up steam and more players are looking to get a piece of the action, we wouldn't be surprised to see similar moves like this in the future involving consolidators, recruiters, investment banks, private equity, you name it."
As to why Raymond James opted to buy a specialty investment bank instead of building out a wealth management practice, GJ King, president of RIA in a Box, credited the reputation of Silver Lane.
"The RIA space remains highly fragmented, and this new combination will enhance the industry as more firms look for thoughtful guidance on growth and succession planning," he said.
"However, as the data shows, the RIA industry itself continues to become even more fragmented every year and this latest merger of two great investment banking firms likely won't have much impact on the overall fragmented nature of the RIA industry," he said.
Silver Lane managing director Peter Nesvold said much of Raymond James' new asset and wealth management investment banking business will be consolidated in Silver Lane's current New York offices.
"For us, it's about growth and the opportunity to do bigger deals, and access to other verticals in banking, insurance and an enhanced reach into Europe," Mr. Nesvold said. "And Raymond James' investment bank has a major initiative to enter the wealth management space."
Terms of the deal were not disclosed.