M&A activity in the investment advice business is most definitely hotting up. In the lastest example, large RIA firm Colony Group has been acquired by Focus Financial. In case you're counting, that's the fourth deal this year for Focus.
The Colony Group LLC, a Boston-based RIA firm managing $1.3 billion in assets, has agreed to join Focus Financial Partners LLC, bringing total assets under management at one of the largest adviser partnerships/roll-up to $45 billion. The deal will become effective on Oct. 1.
“This is one of the biggest transactions in the RIA space for the year,” said Focus CEO Rudy Adolf. “And this is a jewel of a business.”
Founded in 1986 by Kirby Hamilton, Colony Group provides comprehensive wealth management services to high net worth clients, corporate clients and a variety of institutions. Along with its Boston headquarters, it has two offices in Florida and one in Washington, D.C.
“What stands out about this firm is their scale and sophistication,” said Mr. Adolf. “They have professional managers and serve exclusive clientele from multiple locations.”
Competition for quality RIA firms has been intense this year. Competitors such as United Capital Financial Advisers LLC, Hightower Advisors LLC, and Beacon Pointe Advisors have also been courting firms aggressively.
“We've heard from other suitors, but we think Focus is unique,” said Colony CEO Michael Nathanson, who has been named to the Barron's Top 100 independent wealth advisors list four times including this year. “We've watched them develop from a player to a leader in the industry and we saw this as an opportunity to use their financial resources to further our growth strategy and help us access top talent and better technologies.”
Mr. Nathanson said Focus' desire to have the firm maintain its independence was also a key factor in inking the deal. “We value our independence and the deal structure allows us to operate our business as we see fit,” said Mr. Nathanson. “It also offered us the right mix of cash and stock.” Details of the deal were not disclosed.
The transaction allows the firm to cash out Colony founder Kirby Hamilton, the former Chairman and CEO of the firm. “We didn't do the transaction for succession purposes, but we quickly realized the opportunity it presented,” said Mr. Nathanson, Mr. Hamilton will remain involved in the advisory side of the business, but he has transferred his ownership interests in Colony and Mr. Nathanson will assume Chairman duties. “This allows us to incentivize the next generation of service providers at the firm.”
The acquisition is the fourth for Focus this year; the deals have increased its assets by $5 billion. Since its founding in 2006 with four partner firms and $3.5 billion in assets under management, the firm has now acquired 19 partner firms and has $45 billion in assets under management.
“The firms that join us spend a lot of time with other partner firms to hear our story,” said Mr. Adolf. “Unless there's a good connection between them, the deal doesn't happen.”
