On July 16, the sale of United Capital to Goldman Sachs was consummated.
One headline doesn't capture everything it took to reach that finish line: 14 years, 100 acquisitions, four capital raises, more than 700 employees hired and over $100 million spent on innovation, from technology to consumer research, training and product development.
After a targeted funding process in which we invited only firms with which we had cultural alignment, we narrowed the field down to two finalists: the first a top-tier private-equity firm and the other Goldman Sachs.
Both had been selected because they made competitive bids, but also because we felt they valued our mission, the firm we had built and the amazing people in it. One investor would let us keep going down a similar road as an independent firm. The other would buy us entirely and we'd become a part of a Wall Street powerhouse.
Since we announced the sale a couple of months ago, I have been asked one question above all others: Why did you decide to sell the firm? The simple answer is it was the right thing to do. But for a slightly more fulsome response, I'd like to share the three major areas that played into the decision.
1. The economics. We have always run the business conservatively in a financial sense. Our firm had very little debt on the balance sheet. We had four institutional investors and none of them had control. They had all enjoyed enough appreciation that their equity carried the same value as all the other investors — a rarity in the acquisition world.
Thanks to our conservative approach, everyone would receive a higher valuation than the most recent one we used for acquisitions we'd just made in April. Everyone would also be paid in cash. The upside would be quite different depending on which path we chose. Ultimately, Goldman tipped the scales in their favor with the creativity they brought into the transaction to make a sale more economically interesting for our advisers, our employees and our clients.
2. The future. As a 22-year CFA charter holder, I consider price as part of the equation, but risk the other vital element. Looking into the future, I am certain that providing a fully integrated financial experience will be vital to thriving if you serve the affluent market. To win in the future, United Capital would need to go beyond building financial plans and managing assets. Advisers may offer banking services, refer clients for tax preparation and deliver it all on an elegant, integrated platform.
As an independent firm, it would take several more years and many millions of dollars to build this offering. We realized that joining Goldman would accelerate that effort overnight. They could provide multiple solutions for our clients that we could never build, from alternative investments to CDs. Just as importantly, they would bring an instant boost to our organic growth efforts by spreading our wealth management services across their platform. And regardless of market conditions, our team and clients would be safely harbored inside one of the most prestigious firms in the financial world.
Meanwhile, we can fast-track a truly revolutionary client experience with access to resources beyond anything we could conceive as an independent firm. We could become the standard against which others are measured — not just for the affluent clients we work with directly at United Capital, but for the independent advisory firms that serve them through our white-labeled FinLife platform. Looking ahead, one option presented us with a brighter, safer future.
3. The burden. This is the second time I have been part of selling a company to a Dow 30 firm, but this time was quite different. In the first instance, I had joined as an intern, became president and drove the business as part of a team. We sold it to General Electric and, after several iterations, it became AssetMark. Throughout that voyage, though, we had a shared burden.
As the person who started this most recent voyage, while I have incredible partners who deserve full credit for all that we have accomplished, I could never forget that I would always be the only one responsible for its failure. That has been a lot of responsibility to carry for 14 years.
I have thought about every person I would let down if we failed in any way: Every adviser that sold us their life's work, and every employee who joined us and received equity. Every investor who put millions of dollars into our company. Every client who entrusted us with their life's savings.
Knowing that we made good on our promise is more important to me than continuing to be the founder and CEO of this thing that I once imagined. I now share the burden with my new partners at Goldman Sachs. We will all be working to make this one of the best investments they have ever made.
One of the more amusing parts of this transaction has been the speculation about what will happen with me and the firm I founded. Will I be able to play along with a large institution? Will the firm disappear?
The truth is that if you run a company the right way, it's never really yours. It belongs to the investors, the employees and the clients. The second time around, you aren't as attached. You learn that despite what people say, it's not your baby. It doesn't love you back the way your real babies do. It's just this thing you created, that you feel proud of having built, and that you hope will thrive into the future.
When we started the firm, we wanted to shake up an industry that we felt was staid, unimaginative and not helping people to really live better lives. We're turning the page on United Capital as an independent firm, but the future is still unwritten. We all intend to keep shaping the industry for years to come as indispensable advisers.
[More: Winning in a crowded field]