F2 Strategy, a wealth management technology consultancy firm, has attracted new investment to make its first acquisition.
The San Francisco-based firm announced Tuesday that it acquired Oakbrook Solutions, another consulting and services provider catering to banks, trust companies, registered investment advisors, family offices, custodians and retirement plan providers. Oakbrook’s 75 employees will join F2, pushing the combined head count past 100 people and resulting in a client base that manages a combined $2.5 trillion in assets under management.
The deal also includes an investment from private equity firm Renovus Capital. Renovus acquired a majority stake in F2, but further details of the transaction were not disclosed.
The acquisition will allow F2 to more quickly deliver the value it wants to provide clients, said Doug Fritz, who co-founded F2 along with his wife Liz Fritz and will remain CEO of the combined entity. While F2 has built a reputation for creating technology strategies for midsize wealth firms — typically those with assets between $750 million and $200 billion — the addition of Oakbrook brings in more expertise for the actual implementation of that technology, Fritz said.
“My team is not great at the long-term change management and product deployment stuff,” he said. “In order for me to hire the number of people I need to hire to make that team great, it would take three years.”
While many larger firms are looking to reduce their overall technology spend, firms in the midsize market that F2 serves are increasing their tech budgets in 2023 and 2024. This bodes well for F2, which will be the largest technology consultancy focused on wealth management following the addition of Oakbrook, Fritz said.
There are about 1,000 independent firms managing around $1 billion, including bank trusts, RIAs and hybrids, yet only 10% have a dedicated chief technology officer. This means there are roughly 900 firms that could use F2’s services, such as its outsourced CTO (OCTO) offering.
The Oakbrook acquisition positions F2 to go upmarket and better serve larger firms, but the company won’t stray far from its bread-and-butter market, Fritz said.
“Our business model will continue to be the innovative, midmarket to large independent wealth management firms that see technology as a lever that drives business,” he said.
The firm needed outside capital to make the deal for Oakbrook, and Renovus has a history of helping to grow service delivery firms like F2, Fritz said. “Renovus is investing in the future of F2 Strategy via the firms we serve now as well as those we expect to serve via our accelerated growth trajectory,” he said in an emailed statement.
F2 embodies what Renovus looks for in an investment, Lee Minkoff, principal at Renovus Capital, said in a statement.
“Their leadership in technology strategy and implementation for high-growth organizations, coupled with their deep understanding of the wealth management industry, sets them apart,” Minkoff said.
Broadhaven served as exclusive financial advisor to F2 Strategy for the deal.
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