Merit's M&A efforts get credit line boost from Constellation Wealth Partners

Merit Financial Advisors is bringing an improved line of credit to its M&A dealmaking, courtesy of the $20 billion RIA’s minority investment from Constellation Wealth Partners.

Atlanta-based Merit announced in early July that Constellation’s investment would replace backing from Wealth Partners Capital Group and HGGC’s Aspire Holdings, who have held minority stakes in Merit since 2019. Merit has grown to over 40 offices across the US and most recently acquired Second Half Financial Partners, a $225 million RIA based in Florida, which has a focus on serving families of firefighters and police officers in the state. 

“Just like any business needs different resources when they hit scale and when they hit different milestones, we had a different set of needs, and that's really what Constellation is bringing,” Tyler Vernon, managing principal and partner at Merit, told InvestmentNews. “They were able to help negotiate a credit line with much greater terms than we've had previously. That will give us the ability to continue to grow over the next several years — plenty of runway, plenty of dry powder as we find more succession plays that maybe are cash heavy.”

Constellation Wealth Partners is a private equity firm founded by former Emigrant Partners CEO, Karl Heckenberg. Other RIAs in which Constellation is a minority investor include Lido Advisors, Perigon Wealth Management, AlTi Tiedemann Global and Bogart Wealth. Before Constellation made its investment, Merit negotiated its last credit line in 2022. 

"If you remember what was going on in 2022, Russia invaded Ukraine, credit spreads were blowing out,” said Vernon. “It served the purpose, but we're in a much different environment now, we're a larger firm. We've executed phenomenally on M&A and bringing on growth partners. So we've gotten better terms as far as interest rate, as well as just flexibility in the line, and a larger line as well.” 

Merit is targeting RIAs with between $200 million and $2 billion in assets, with an added eye for finding advisors who serve niche groups of clients. Vernon himself specialized in serving clients from the United Parcel Service before he sold his firm Biltmore Capital Advisor to Merit in 2022. Second Half Financial Partners is the fifth Florida-based firm to join Merit, which led all RIAs with nine total acquisitions in the first half of this year.

“They've also been very helpful from an M&A standpoint, and as far as recruiting larger teams,” Vernon said of Constellation Wealth Partners. “So I think what we're seeing now is that the narrative today is talking to much larger teams than maybe we were five years ago.”