CAPTRUST acquires $19B RIA in its sixth deal this year

With $243 billion in assets, CAPTRUST continues to grow on its own terms.
AUG 22, 2017

CAPTRUST, one of the nation's largest diversified investment advisory firms, has completed its sixth acquisition of the year by folding in Tampa-based CapTrust Advisors, a $19 billion firm. The deal brings Raleigh, N.C.-based CAPTRUST to $243 billion under advisement with 435 employees in 35 branch offices. The two firms have similar names because they broke away from the same holding company, a subsidiary of Wachovia Securities known as CapTrust, in 1998. Details of the transaction were not disclosed, but according to CAPTRUST chief executive Fielding Miller, CapTrust followed the requirement of taking at least half the cost of the deal in CAPTRUST stock. "This deal gives us a lot more scale and more capital to invest back into the business," he said. CAPTRUST, which specializes in retirement plans and had about $350 million under advisement in 1998, has grown both organically and through 26 acquisitions over the past 10 years. But, as illustrated by the fact that it didn't make any acquisitions last year, Mr. Fielding said the company's growth strategy is patient and strategic, and relies heavily on organic growth. "One thing you have to get right in an acquisition is a strong cultural match," he said. "We've known these (CapTrust) guys for a long time, and we knew their culture paralleled ours." As with all CAPTRUST acquisitions, the acquired company will take on the CAPTRUST brand and become part of the larger company. But, as Eric Bailey, principal of the former CapTrust company explained, this deal is not a one-way street. "We have grown from about $250 million in 1998 to develop pretty substantial niches that includes serving religious organizations, as well as endowments and foundations," he said. David DeVoe, managing partner at DeVoe & Co., credited CAPTRUST for its deliberate pace of growth without tapping into the deep pockets of private equity investors. "CAPTRUST is unique in a lot of respects," he said. "Clearly, they are an example of an RIA that is not only a leading acquirer, but it's a pretty powerful story that they've been able to achieve that kind of scale without taking any P-E money." In terms of the size of the deal, Mr. DeVoe acknowledged that a $19 billion advisory firm is on the top end, but said a firm the size of CAPTRUST will need to continue to buy larger firms in order to keep adding scale. "This is a mega deal," Mr. DeVoe said. "But when you're at $200 billion-plus, you have the ability to acquire larger firms, and you need to be acquiring larger firms." According to Mr. Miller, of the 26 firms CAPTRUST has acquired, the average annualized increase in revenues post-acquisition has been 18%. "This is either the biggest deal we've ever done, or right at it," he said. "More assets under management means more leverage with money managers, and more access to money managers for lower fees." Daniel Seivert, chief executive at the investment bank Echelon Partners, recognized CAPTRUST for its growth strategy while maintaining its independence, "They've demonstrated a nice balance of organic and inorganic growth," he said. "The strength of their organic growth is a testament to the business model, and the number of deals they've done suggests they have the staff and resources to manage the integration."

Latest News

Merrill to pay $39 million in cash sweep settlement
Merrill to pay $39 million in cash sweep settlement

The financial advice industry has been facing inquiries into its cash sweep programs for years now.

SEC accuses fund advisor of defrauding SpaceX, OpenAI investors
SEC accuses fund advisor of defrauding SpaceX, OpenAI investors

Investor money allegedly went to strip clubs, exotic cars, and landscaping

RIA moves: Savant enters Thousand Oaks as Procyon lands in New Jersey
RIA moves: Savant enters Thousand Oaks as Procyon lands in New Jersey

Procyon adds $415 million in assets under management in New Jersey while Savant picks up a $213 million Southern California planning firm

Beyond sell or inherit: A third exit for appreciated property
Beyond sell or inherit: A third exit for appreciated property

With a growing number of real estate-rich Baby Boomers aging into retirement, some advisors may be failing to consider all the options available for those clients' assets.

AI marketing adoption gap costs financial firms revenue
AI marketing adoption gap costs financial firms revenue

Cornerstone Advisors study reveals compliance bottlenecks stall campaigns weeks after customer opportunities close.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains