Captrust Financial Advisors has snapped up one of the largest firms it has ever purchased and tacked on $5.5 billion in new assets in the process.
The firm's second acquisition of the year, of Montgomery, Ala.-based Welch Hornsby, pushed its assets under management and advisement to roughly $370 billion.
Edward Welch, chief executive of the 32-year-old advisory firm, said the sale was not intended as a succession plan, but that “it certainly solves that issue.”
Another bonus of the deal is that of selling at the top of the white-hot market for advisory firm consolidation.
The deal, which has been in the works since June, officially closed Feb. 15, just ahead of the stock market pullback in response to the COVID-19 pandemic.
“Fortune smiled on us in that regard,” Mr. Welch said, referring to the potential for valuations to fall in stride with the stock market downturn.
Welch Hornsby, which will operate under the Captrust brand, has offices in Alabama and North Carolina.
Like Raleigh, N.C.-based Captrust, the majority of the firm’s assets under advisement are in qualified retirement plans. But the firm has $1.75 billion of discretionary managed assets, and 70% of its revenues are related to wealth management.
Mr. Welch said the sale to Captrust started nearly two years ago, when he was looking for sources of outside capital. That led him to some investment bankers, introducing him to about 20 different potential buyers.
“There’s a lot of energy around this, and we’re very excited,” he said. “Captrust has built an incredible firm with rich resources for us to draw from, including an incredible tech stack and a robust trading platform that will free up our guys to be in front of their clients more than in the past.”
Captrust did not disclose details of the transaction, but said firms that join usually receive a mix of cash and equity, with at least 50% of the deal being Captrust equity.
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