Wealth management firm United Capital Financial Advisers yesterday announced the purchase of four advisory firms, boosting both its assets under management and the types of products and services it can offer clients.
Based in Newport Beach, Calif., United Capital in the past three years has built a nationwide network of advisory firms through acquisitions. The latest buying spree expands the company's size to 14 offices with roughly 3,200 clients and more than $8 billion in assets.
The four new firms are PFE Group, a leading corporate advisory firm based in Southborough, Mass.; Spectrum Assets, Inc., an independent investment advisory firm in Boca Raton, Fla.; Park Cities Financial Group, a brokerage and investment advisory firm in Dallas, and Sapient Wealth Management, a high net worth practice in Stamford, CT. The company wouldn't disclose the total purchase cost.
United Capital buys 100% of a partner firm's assets. In return, it does all of their compliance work, bill paying, reporting and other nuts-and-bolts operational chores so that the firms can focus on client relationships and growing their business. "We totally integrate these firms," says United Capital CEO Joe Duran.
Duran says that United Capital thoroughly vets prospective acquisitions to avoid any potential bad seeds that could negatively impact the entire organization, and to make sure that new firms will immediately contribute to the overall company's success-and vice versa.
"Our first rule is can we be additive to the firms we acquire," says Duran, "because if we can we know there's financial arbitrage. To have value you have to create value." He notes that acquired firms have boosted their cash flow by an average of 40% within 12 months of being purchased. "We've never had one that hasn't had a double-digit increase."
United Capital traditionally purchases firms with assets between $100 million and $500 million, which was the case with three of the new firms. But they broke the mold with PFE Group, a company with $6 billion in assets whose 401(k) and pension advisory business includes the likes of Pepsico, GMAC and NASCAR. "PFE Group adds a whole new magnitude of services we can offer," says Duran.
Matt Brinker, United Capital's vice president of acquisitions, says more super-sized acquisitions are in the works. "As we get bigger we're able to digest billion-dollar firms," he says, adding that the company expects to announce more acquisitions in the near future.