Miracle Mile Advisors gets new PE backer in conjunction with $1.2 billion deal

The LA-based RIA notches its biggest deal to date with the purchase of Karp Capital Management, and with Corsair Capital taking Merchant's ownership stake, the deals are expected to get even bigger.

Two West Coast advisory firms are joining forces to create a $4 billion registered investment adviser.

Los Angeles-based Miracle Mile Advisors is kicking off the second stage of a growth strategy by acquiring San Francisco-based Karp Capital Management, a $1.2 billion RIA founded in 2004.

The deal, which is scheduled to close in November, also represents a transition in private equity ownership for Miracle Mile.

In conjunction with the Karp announcement, Miracle Mile announced a “significant investment” from private equity firm Corsair Capital, which is acquiring the ownership stake from Merchant Investment Management.

Merchant, which acquired its stake in Miracle Mile in December 2020, supported four acquisitions. The Karp deal is occurring under the financial backing of Corsair, according to Miracle Mile managing partner Duncan Rolph.

“As part of the transaction, Merchant is exiting and we’re bringing on Corsair,” he said. “Corsair is growth equity; they have a good track record, and they’ve been around a long time. From a holistic perspective, Corsair makes a lot of sense to us.”

With the Karp acquisition, Miracle Mile will have two California offices, as well as offices in Oregon, New York and Chicago.

Describing the RIA’s growth strategy, Rolph said, “People trump geography.”

“We’re really focused on continuing to add to high-quality talent,” he said. “We have clients in almost every state, and post-Covid, the physical locations become less important as you think through how you service clients.”

Corsair expects to leverage its fintech and wealth management expertise to support Miracle Mile, which was launched in 2007.

“We have been looking at the wealth advisory space for several years, trying to find the right platform company, and we found it in Miracle Mile,” Corsair partner Gunnar Overstrom said in a statement.

“Their unwavering commitment to clients, incredible management team, market-leading growth and award-winning culture makes the newly combined firm a perfect fit,” he said.

David DeVoe, founder and chief executive of DeVoe & Co., said the Karp deal marks the 191^st RIA transaction of 2022 and reflects the continued strength of consolidation among RIAs.

“A growing number of RIAs are feeling pressure to gain scale, as they see the emergence of meta-RIAs, with tens or even hundreds of billion in AUM,” he said. “In some cases, they are deciding that a merger with similar-sized partner will enable them to fortify their position in their marketplace, compete more effectively and grow more efficiently.”

[More: Scorching hot August for RIA M&A: Fidelity]